Report on State Finances 2019-2020 · 2020. 11. 18. · Report on State Finances 2019-20 2 - 1 2....

Report on State Finances

2019-2020

TABLE OF CONTENTS Page

Report on State Finances 2019-2020

About this Report .................................................................................................................. 1 - 1

General Government Sector Results .................................................................................... 2 - 1

Total State Sector Results .................................................................................................... 3 - 1

Total State Sector Accounts 2019-2020: Audited Consolidated Financial Statements of the NSW General Government and Total State Sectors ......................................... 4 - 1

Statement of Compliance ..................................................................................................... 4 - 2

Independent Auditor’s Report Total State Sector Accounts ................................................. 4 - 3

Statements of Comprehensive Income ................................................................................ 4 - 9

Statements of Changes in Equity ......................................................................................... 4 - 11

Statements of Financial Position .......................................................................................... 4 - 12

Statements of Cash Flows .................................................................................................... 4 - 13

Notes to the Financial Statements ...................................................................................... 4 - 14

Uniform Presentation Framework: Outcomes Report ................................................. 5 - 1

Statements of Financial Position .......................................................................................... 5 - 3

Sector Reports

General Government Sector .............................................................................................. 5 - 5

Public Non-Financial Corporations Sector ......................................................................... 5 - 17

Non-Financial Public Sector ............................................................................................... 5 - 22

Public Financial Corporations Sector ................................................................................. 5 - 27

Report on State Finances 2019-20 1 - 1

1. ABOUT THIS REPORT

The 2019-20 New South Wales Report on State Finances includes:

an overview of the financial performance and position of the General Government and Total StateSectors for 2019-20.

the audited Consolidated Financial Statements of the General Government and Total State Sectors for2019-20, including a full set of note disclosures required by Australian Accounting Standards.

the Outcomes Report on Government Finances for the General Government Sector, PublicNon-Financial Corporations Sector, Public Financial Corporations Sector and the Non-Financial PublicSector for 2019-20, prepared in accordance with the Uniform Presentation Framework adopted by allAustralian governments.

These reports and associated commentary provide a comprehensive analysis and review of the State’s financial performance and position.

The New South Wales Total State Sector (TSS) is made up of the General Government Sector (GGS), the state’s Public Non-Financial Corporations (PNFCs) and Public Financial Corporations (PFCs) whereby:

GGS agencies carry out policy, regulatory and service delivery functions.

PNFCs, other than in the transport and housing sectors, are largely self-funded from user charges and inmost cases have been given a specific charter to run their businesses on commercial lines, including theachievement of a commercial rate of return on the resources employed. PNFCs are responsible forsupplying public infrastructure services, including electricity, water and public transport.

PFCs may accept demand, time or savings deposits and/or have the authority to incur liabilities andacquire financial assets in the market on their own account. An example of a PFC is the New SouthWales Treasury Corporation.

Throughout this report:

A reference to one billion dollars is one thousand million dollars.

All figures in tables, charts and text are rounded to the nearest million dollars, except when otherwiseindicated. Discrepancies between totals and the sum of components reflect rounding. Percentages arebased on the underlying unrounded amounts.

Prior year comparatives have been restated to take account of changes to accounting standards andcorrections of prior period errors. Material changes are highlighted in Note 32: Restatement / Correctionsto Prior Years.

Acknowledgement of Country

NSW Treasury acknowledges that Aboriginal and Torres Strait Islander peoples are the First Peoples and Traditional Custodians of Australia, and recognises their continued custodianship of Country - land, seas and skies. We acknowledge the diversity of First Nations cultures, histories and peoples, recognise their enduring connection to our State, and we pay our deepest respects to Elders past, present and emerging.

Michael Pratt AM Secretary NSW Treasury 17 November 2020


2. GENERAL GOVERNMENT SECTOR RESULTS 2.1 Operating Statement

The 2019-20 Budget Result for the General Government Sector (GGS) was a deficit of $6.9 billion, a reduction of $7.6 billion compared to the Half-Yearly Review expected surplus of $0.7 billion. The lower than expected result since the Half-Year Review was impacted by significant and unexpected events including the summer 2019-20 bushfires and the COVID-19 pandemic.

Table 2.1: General Government Sector Key Financial Indicators – Performance on Operating Result

Key Financial Indicators (GGS) - Statement of Comprehensive Income Actual Original Published HYR(b) Actual 2018-19 Restated(a) Budget 2019-20 2019-20 2019-20 $b $b $b $b

General Government Sector

Revenue 81.7 84.3 84.2 81.4

Expenses 80.5 83.3 83.5 88.3

Budget Result (Net Operating Balance) 1.2 1.0 0.7 (6.9)

Comprehensive Result (2.1) 4.9 0.9 (10.4)

Gross Capital Expenditure 16.6 22.3 23.7 21.0

Cash Result (10.3) (12.7) (14.2) (17.3)

Net Lending/(Borrowing) (9.3) (14.5) (16.4) (22.1)

(a) Refer Note 32 of the TSSA Restatement/Corrections to Prior Years, for details of corrections to prior period. (b) Published Half-Yearly Review 2019-20

The $6.9 billion deficit reflects $81.4 billion in revenue, a decrease from the previous year of $0.3 billion, offset by expenses of $88.3 billion, an increase from 2018-19 of $7.8 billion.

Chart 2.1: Key Changes in Budget Result in 2019-20

-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

2019 CommonwealthGrants

TaxationRevenue

Dividends,Income

Tax Equivalentsand Other

Distributions

Other Revenue Grant Expenses EmployeeExpenses

Other Expenses 2020

$ m

illion

s

Revenue

Marginally lower revenues of $288 million relative to 2018-19 were primarily driven by:

decrease in state taxation of $1,085 million including reduced payroll tax ($849 million) in response to weaker employment outcomes and the impact of relief measures, stamp duty ($430 million) in response to a lower transfer duty outcome, and gambling taxes ($427 million) as a consequence of mandated venue closures from March to June 2020;

General Government Sector Results

2 - 2 Report on State Finances 2019-20

reduced agency sales of goods and services of $1,032 million mainly as a result of a decrease in fee for service revenue for major rail projects ($269 million) and passenger revenues due to the change in the recognition of passenger service revenue as per AASB 15 ($112 million), reduced level of activity across the healthcare system impacted by COVID-19 restrictions, requiring some regular activities to be placed on hold ($106 million) and a further $94 million decrease due to reasons other than COVID-19, including decreased patient fees as a result of the private health funds paying reduced room rates for single rooms;

interest revenue in 2019-20 of $364 million, was $127 million lower than 2018-19 mainly as a result of the decrease of interest revenue on Treasury Corporation (TCorp) investment management funds in Restart, NSW Generations Fund (NGF) and Social & Affordable Housing Fund (SAHF) due to the current market conditions;

fines, regulatory fees and other revenue in 2019-20 at $4,262 million in total were $418 million lower than the prior year, this was primarily due to a $410 million fall in mining royalties, driven by continued declines in thermal coal prices; and

partially offset by $2,412 million increase in Commonwealth grants received including the recognition of an additional $490 million National Land Transport revenue for Transport for NSW due to implementation of AASB 1058, $675 million bushfire-related grants from the Commonwealth, $925 million to the Ministry of Health due to COVID-19 and $209 million increase in the National Education Reform Agreement.

Expenses

Compared to the prior year, expenses were heavily impacted by responses to drought, the 2019-20 bushfires and COVID-19 pandemic. Expenditure on these responses, together with increased investments in frontline services led to an overall increase in expenses of $7,833 million largely driven by:

growth in employee cost of $2,104 million included: − wage inflation increases ($762 million); − the Ministry of Health’s salaries and wages further increased by $428 million mainly due to FTE

growth, and additional resources and overtime payments as a result of the COVID-19 public health response;

− the Department of Education salaries and wages increased by a further $454 million due to a one-off pay rise of 11% for school administrative staff ($160 million), additional leave including an extra day ($80 million), Workers Compensation claims ($60 million) and the remainder due to growth in full time employees; and

− increases across several agencies mainly due to frontline services and other policy measures.

higher grants and subsidies of $2,670 million reflecting: − an increase of $741 million in Department of Communities and Justice including $229 million in

Disaster response service related to bushfires, $184 million increase in National Disability Insurance Scheme (NDIS) and $101 million increase in contracted out of home care services;

− an increase of $541 million in Transport for NSW grants primarily driven by non-cash grants to third parties ($500 million) including transfer of assets to local councils relating to Sydney Light Rail ($355 million);

− increase of $539 million related to approved Small Business Grant programs and quarantine package as part of the COVID-19 stimulus programs;

− grants and subsidies to NSW Rural Fire Service of $351 million, higher predominantly due to increase in expenditure for goods and services consumed by Natural Disasters ($368 million); and

− increase of $124 million in New South Wales Rural Assistance Authority grants due to the Emergency Drought Relief Package and Bushfire Industry Recovery Package.

higher other operating expenses of $2,010 million included increases in NSW Self Insurance Corporation of $2,024 million mainly due to the first time inclusion of $828 million for sensitive claims relating to historical abuse, $551 million impact in the workers compensation portfolio largely from continuing cost increases for certain claim types, $507 million losses related to the bushfire disaster and $343 million additional insurance claim costs due to COVID-19 impact; and

higher depreciation of $777 million mainly due to the changes in accounting standard AASB 16 Leases, that has resulted in leased assets being recognised as right-of-use assets (PP&E) which would incur depreciation expense.



Capital Expenditure

Capital expenditure was $20,985 million in 2019-20, $4,362 million higher than the prior year ($16,623 million). This represents the fifth year of record annual spend in New South Wales and reflects the Government’s commitment to delivery of infrastructure for NSW communities and strong economic growth.

Major projects progressed during 2019-20 included:

Sydney Metro City and Southwest ($1,672 million);

Pacific Highway Upgrade Woolgoolga to Ballina ($980 million);

Randwick Campus Reconfiguration and Expansion (Prince of Wales) - Stage 1 ($720 million); and

Campbelltown Hospital Stage 2 ($632 million).

In addition, a number of major projects were completed in the year. These included:

CBD and South East Light Rail ($2.9 billion capitalised);

Gosford Hospital Redevelopment ($348 million); and

New and upgraded schools, including Ultimo Public ($31 million), Oran Park High ($57 million), Arthur Philip High ($109 million) and Queanbeyan High ($13 million).

2.2 Balance Sheet

Table 2.2: General Government Sector Key Financial Indicators – Balance Sheet Performance

Key Financial Indicators (GGS) - Statement of Financial Position

Actual Original

Published HYR(b) Actual

2019 Restated(a) Budget 2020 2019-20 2020 $b $b $b $b

Total Assets 401.2 420.3 421.9 425.7

Total Liabilities 152.1 153.3 170.8 187.0

Net Worth 249.1 266.9 251.1 238.7

Net Debt (10.4) 12.4 12.9 19.3

Net Debt as a % of GSP(c) -1.7% 1.9% 2.0% 3.0%

Net Financial Liabilities (NFL) 81.2 92.5 105.1 111.9

NFL as a % of GSP(c) 13.0% 14.3% 16.2% 17.3%

(a) Refer Note 32 Restatement/Corrections to Prior Years, for details of corrections to Prior Period. (b) Published Half-Yearly Review 2019-20 (c) GSP actuals for 2019-20 not released at the time of publication. Numbers reflect 2019-20 GSP forecasts from the 2019-20 HYR.

Net Debt

General Government Sector net debt was $19.3 billion at 30 June 2020, compared to a negative net debt of $10.4 billion in 2018-19. This significant increase in net debt was mainly driven by the Government’s commitments in delivering its record infrastructure investment program and the negative operating conditions due to the COVID-19 pandemic, drought response and bushfire emergencies. This increase in net debt was made up of:

an increase in borrowings of $30,230 million to $67,885 million. This increase includes $22,817 million related to new TCorp borrowings in the Crown Finance Entity and $7,640 million in non-cash debt movements including $5,847 million mainly due to the adoption of AASB 16 Leases and $1,793 million for the Sydney Light Rail Public Private Partnership liability;

$3,516 million decrease in Investments, Loans and Placements primarily due to $4,334 million of withdrawals from the NSW Infrastructure Investment Fund to fund Restart NSW funded infrastructure projects offset by returns on TCorp managed investment funds; and

partially offset by an increase of $4,165 million in cash and cash equivalents associated with higher liquidity holdings during COVID-19.


2 - 4 Report on State Finances 2019-20

Net Worth

The net worth of the General Government Sector for the year ended 30 June 2020 was $10.4 billion less than the prior year – this was made up of:

increased assets of $24.5 billion including increases in financial assets ($5.8 billion), property plant and equipment ($10.7 billion) and right-of-use-assets ($6.5 billion); and

increased liabilities of $34.9 billion driven by an increase in borrowings ($30.2 billion), other provisions ($2.5 billion) and employee provisions ($1.8 billion).


3. TOTAL STATE SECTOR RESULTSThe Total State Sector (TSS) comprises the GGS, PNFC and PFC sectors. Therefore, the TSS results reflect the outcome of the General Government Sector’s operations and the outcome of all Government businesses and State-Owned Corporations.

3.1 Operating Statement

Table 3.1: Total State Sector Key Financial Indicators – Statement of Comprehensive Income

Key Financial Indicators (TSS) - Statement of Comprehensive Income

Actual Original Actual2018-19 Restated(a) Budget 2019-20 2019-20

$b $b $b

Total State Sector Revenue 86.1 88.0 86.3 Expenses 87.8 90.8 96.0 Budget Result (Net Operating Balance) (1.7) (2.8) (9.7) Comprehensive Result (2.1) 4.9 (10.4) Gross Capital Expenditure 21.8 27.7 25.3 Cash Result (14.0) (18.0) (21.5) Net Lending/(Borrowing) (14.6) (20.1) (26.1)

(a) Refer Note 32 of the TSSA Restatement/Corrections to Prior Years, for details of corrections to Prior Period.

The Net Operating Balance in 2019-20 was a deficit of $9.7 billion, representing a decrease of $8.0 billion compared to 2018-19. This lower budget result reflects impacts in the GGS of COVID-19 and natural disaster emergencies, including increased expenditure on frontline service delivery, recurrent grants and subsidies and in other operating costs in the General Government Sector.

Total State Sector revenue for 2019-20 was $86.3 billion, $0.2 billion higher than the prior year, primarily due to higher Commonwealth grants and subsidies received ($2.4 billion), offset against lower taxation revenue ($1.1 billion) and lower sales of goods and services ($1.1 billion).

Higher expenses of $8.2 billion resulted from increases in grants and subsidies ($2.5 billion), increases in employee related costs, including superannuation ($2.3 billion), increases in other operating costs ($2.2 billion) and increases in depreciation and amortisation ($1.2 billion).

Capital expenditure of $25.3 billion was $3.5 billion higher than in 2018-19. This mainly reflects the level of capital spend in the General Government sector.

3.2 Balance Sheet

Net debt of the Total State Sector as at 30 June 2020 was $55.4 billion or 8.6 per cent of forecast GSP. This compares to net debt at 30 June 2019 of $23.9 billion or 3.8 per cent of GSP.

The increase in net debt is largely the result of higher borrowings and derivatives at fair value. This is driven by Crown's increased borrowing profile to fund various relief and stimulus packages in response to the widespread bushfires and COVID-19 pandemic, and an increase in non-cash borrowings at amortised cost due to adoption of AASB 16 Leases.

Net worth of the Total State Sector for the year ended 30 June 2020 was $238.7 billion which was $10.4 billion lower than the prior year. This net decrease was the result of the Comprehensive Income in 2019-20 for the Total State Sector, reflecting a combination of both operating results and balance sheet movements.

Total State Sector Accounts 4 - 1

Total State Sector Accounts 2019 – 2020

Audited Consolidated Financial Statements of the NSW General Government

and Total State Sectors

4 - 2 Total State Sector Accounts

STATEMENT OF COMPLIANCE In our opinion the Total State Sector Accounts:

• have been prepared on the basis of the financial reporting requirements as prescribed in the Public Finance and Audit Act 1983, and

• are in accordance with AASB 1049 Whole of Government and General Government Sector Financial Reporting and all other Australian Accounting Standards.

The Hon. Dominic Perrottet MP Michael Pratt AM Stewart Walters Treasurer Secretary Chief Financial and Operations Officer Treasury Treasury 17 November 2020

INDEPENDENT AUDITOR’S REPORT

New South Wales General Government Sector and Total State Sector

To Members of the New South Wales Parliament

Opinion

I have audited the accompanying financial statements of the New South Wales General Government

Sector and Total State Sector (the Total State Sector Accounts), which comprise the NSW

Consolidated Statement of Comprehensive Income and NSW Consolidated Statement of Changes in

Equity for the year ended 30 June 2020, the NSW Consolidated Statement of Financial Position as at

30 June 2020, the NSW Consolidated Statement of Cash Flows for the year then ended, notes

comprising a Statement of Significant Accounting Policies and other explanatory information of the

Total State Sector Accounts. The Total State Sector Accounts comprises the entities the

New South Wales Government controlled at the year’s end or from time to time during the financial

year.

In my opinion, the financial statements are prepared, in all material respects, in accordance with

Australian Accounting Standards and section 6 of the Public Finance and Audit Act 1983 (the PF&A

Act).

My opinion should be read in conjunction with the rest of this report.

Basis for Opinion

I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the

standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’

section of my report.

I am independent in accordance with the requirements of the:

• Australian Auditing Standards

• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for

Professional Accountants (including Independence Standards)’ (APES 110).

I have fulfilled my other ethical responsibilities in accordance with APES 110.

Parliament promotes independence by ensuring the Auditor-General and the Audit Office of

New South Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove an

Auditor-General

• mandating the Auditor-General as auditor of public sector agencies

• precluding the Auditor-General from providing non-audit services.

I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my

audit opinion.


Key Audit Matters

Key audit matters are those matters that, in my professional judgement, were of most significance in

my audit of the financial statements for year ended 30 June 2020. I determined the key audit matters

after considering the:

• areas I identified as being of higher risk of material misstatement, or significant risks

• areas where I applied significant judgement, which related to areas in the financial report where

management also exercised significant judgement, such as accounting estimates with a high

degree of estimation uncertainty

• significant events or transactions that occurred during the period including bushfire and flood

emergencies and the COVID-19 pandemic, and their effect on the financial statements.

These matters were addressed in the context of my audit of the financial statements as a whole, and

in forming my opinion thereon, I do not provide a separate opinion on these matters.

Key Audit Matter How my audit addressed the matter

Fair value measurement of property, plant and equipment

At 30 June 2020, the Total State Sector Accounts

reported $365 billion in property, plant and equipment

measured at fair value. The closing balance of

property, plant and equipment includes a net

revaluation increment of $4.5 billion recorded during

the year ended 30 June 2020.

I considered this to be a key audit matter because of

the:

• financial significance of the property, plant and

equipment balances to the Consolidated

Statement of Financial Position

• extent of significant management judgements

underpinning key assumptions used in the

valuation process

• sensitivity of fair value to changes in key

assumptions

• specialised and unique nature of the assets

impacting on judgement and complexities in

applying AASB 13 ‘Fair Value Measurement’

requirements.

Details of the valuation techniques, inputs and

processes for major asset classes are disclosed in

Note 14 Property, Plant and Equipment.

Key audit procedures included the following:

• obtained an understanding of management’s

approach to estimating the fair value of Property,

Plant & Equipment

• assessed the accuracy and completeness of

assets included in the revaluation

• assessed the competence, capability and

objectivity of experts engaged by management

• assessed significant judgements made in

determining the valuation approach for

specialised and unique assets, including

impairment

• reviewed the reasonableness of key assumptions

and sensitivity of the conclusions to changes in

those assumptions

• assessed the sufficiency and appropriateness of

the valuation methodologies and management’s

fair value assessments against the requirements

of applicable Australian Accounting Standards

• assessed the sufficiency and appropriateness of

financial statement disclosures against the

requirements of applicable Australian Accounting

Standards.



Implementation of AASB 16 Leases

The Total State Sector Accounts adopted new

Australian Accounting Standard AASB 16 Leases for

the first time in 2019–20. The Total State Sector

Accounts reported:

• right-of-use assets of $9.3 billion and lease

liabilities of $9.8 billion, and finance lease

receivables of $1.5 billion at 30 June 2020

• a $478 million impairment loss against its

right-of-use assets in 2019–20.

I considered this to be a key audit matter because:

• right-of-use assets and lease liabilities are

financially significant to the Consolidated


• the recognition and measurement of leases

including lease payments, lease extension

options, discount rates, and impairment involved

significant management judgements and

assumptions

• of the effect from the COVID-19 pandemic on the

rental market and its impact on impairment

assessments

• of the extent of leasing information that impacts

on the complete and accurate recognition and

measurement of leases.

Further information on leases is included in Note 28

Leases.


• evaluated the design and implementation of key

controls over processes and systems for

recording leases

• tested the completeness, validity and accuracy of

lease data in the lease calculations

• reviewed the reasonableness of methodologies,

management judgements and assumptions in the

lease calculations, including impairment

• tested the mathematical accuracy of the

calculations of right of use assets, lease liabilities

and lease receivables, including impairment

• confirmed lease receivables on a sample basis

• assessed the adequacy of the financial statement

disclosures against the requirements of

applicable Australian Accounting Standards.

Valuation of defined benefit superannuation and long service leave liabilities


reported net defined benefit superannuation liabilities

totalling $71.0 billion and employee long service leave

liabilities totalling $12.6 billion.


• the defined benefit superannuation and long

service leave liabilities are financially significant

to the Consolidated Statement of Financial

Position

• the underlying models used to value the liabilities

are complex due to a high level of judgement and

estimation involved in the valuation assumptions,

including discount rates, salary inflation and other

assumptions

• the total value of the liabilities is sensitive to small

changes in key valuation inputs.

Further information on the valuation of long service

leave and defined benefit superannuation liabilities is

included in Note 22 Employee Provisions and Note 23

Superannuation Provisions.


• assessed the key controls supporting the data

used in the defined benefit superannuation and

long services leave liability valuation models (the

models)

• assessed the completeness and mathematical

accuracy of the data used in the models

• obtained management’s actuarial report and

year-end adjustments, and engaged a qualified

actuary (‘auditor’s expert’) to:

- assess the appropriateness of the models

- confirm the reasonableness of key

assumptions by comparing against accepted

industry benchmarks

- assess the reasonableness of the reported

liability values



applicable Australian accounting standards.



Valuation of financial instruments


held financial instruments measured at fair value;

being $67.7 billion in financial assets and $108 billion

in financial liabilities.

I consider the valuation of financial instruments

measured at fair value a key audit matter because:

• financial assets and financial liabilities measured

at fair value are significant to the Consolidated


• small changes to market observable inputs and

assumptions can significantly impact the fair

value of these financial assets and financial

liabilities

• management applies significant judgement in the

selection of assumptions used to value offshore

borrowings issued in foreign currencies for which

there is limited trading activity ($1.1 billion in

Note 26). These are classified as ‘level 3’

according to the fair value hierarchy under

Australian Accounting Standards (i.e. where

significant unobservable inputs are used in the

valuation).

Further information on the valuation of financial

instruments is disclosed in Note 26.


• obtained an understanding of, and assessed the

valuation models applied to each category of

financial instrument

• assessed the design and tested the operating

effectiveness of the key operational and

information technology controls supporting the

valuation of financial instruments

• tested the inputs to the valuation system by

comparing them to independent market

observable data

• compared the calculations of fair value to

independent recalculations across a sample of

financial instruments

• reviewed the key valuation inputs and significant

assumptions used by management to value

‘level 3’ financial instruments for reasonableness,

and where data was available, agreed these

inputs to market observable data

• confirmed the existence and completeness of

balances at 30 June 2020 with external

counterparties

• assessed the adequacy of financial statement



Valuation of outstanding claims liabilities


recorded $5.9 billion in self-funded worker’s

compensation liabilities and $15.7 billion in other

outstanding claims liabilities totalling $21.6 billion.

The valuation of the outstanding claims liabilities

involves significant judgement in determining the

timing and value of expected future payments for

claims incurred and related costs to settle the claims.

In determining the valuation of the liabilities,

management engages actuarial specialists to model

and develop assumptions to estimate the outstanding

claims liabilities.

Valuation judgements at 30 June 2020 were impacted

by bushfires, the COVID-19 pandemic and

government responses to the pandemic. As the

impact of the COVID-19 pandemic continues, there is

heightened uncertainty with the financial outlook. This

includes factors such as employment and salary

levels, access to medical services, further

government restrictions, the severity and duration of

the economic recession and volatility in the

investment markets.


• with the assistance of our actuarial expert

(‘auditor’s expert’):

- evaluated the competence, capabilities and

objectivity of management’s actuaries

- gained an understanding of the work of the

management’s actuaries and evaluated the

appropriateness of their work, including their

models

- assessed the valuation methods and

approach used by management’s actuaries

against the requirements of accounting

standards and industry practice

- assessed the assumptions used as inputs

into the valuation models

- reviewed the results of the claims history

investigations carried out by management’s

actuaries, to determine how they inform the

assumptions used

- evaluated the process undertaken by

management in determining estimates of

notified losses arising from 2019–20 NSW

bushfires, relied upon by the actuaries




• the outstanding claims liabilities are financially

significant to the Consolidated Statement of

Financial Position

• the degree of judgement in developing

assumptions and the complexity of valuation

models.

The level of judgement means that the valuation of

the outstanding claims liabilities may change

significantly and unexpectedly due to changes in

assumptions.

Further information on the valuation techniques,

inputs and assumptions used to value outstanding

claims liabilities is included in Note 22 Employee

Provisions and Note 24 Other Provisions.

- evaluated the judgements made by

management’s actuaries in assessing the

impact of the COVID-19 pandemic and

natural disasters on assumptions used in

estimating the total outstanding claims

liability

- assessed the adequacy of the related

financial statement disclosures against the

requirements of applicable Australian

Accounting Standards.

Taxation and statutory revenue

The Total State Sector Accounts reported

$32.4 billion of taxation and statutory revenue (fines,

mining royalties and regulatory fees) in 2019–20,

$4.5 billion of taxation and statutory receivables

(excluding $987 million Goods and Services Tax

receivable) and $454 million in an allowance for

impairment for taxation and statutory receivables.

The Total State Sector Accounts adopted AASB 1058

Income of Not-for-Profit Entities and AASB 9 Financial

Instruments for taxation and statutory revenue and

receivables in 2019–20. The effect of adopting

AASB 1058 and AASB 9 resulted in an increase in

taxation and statutory revenue of $234 million in

2019–20.

I consider this to be a key audit matter because:

• of the financial significance of taxation and

statutory revenue and receivables

• the adoption of the new standards changed the

timing of when taxation revenue is recognised

• recognition and measurement of taxation and

statutory revenue was significantly affected by

the COVID-19 stimulus measures implemented

by the NSW Government including deferral of

lodgements in returns for self-assessed taxes

• the calculation of the allowance related to

taxation receivable requires significant

judgements and assumptions.

Further information on the impact of adopting AASB

1058 on taxation and statutory revenue is included in

Note 2 Revenue.


• evaluated the design and tested operating

effectiveness of controls over key revenue

streams, including land tax, payroll tax, duties,

gaming machine taxes and mineral royalties

• recalculated key revenue streams for

reasonableness against the requirements of the

relevant taxation legislation

• tested the adjustments of payroll tax revenue

resulting from the adoption of AASB 1058 and

AASB 9; ensuring adjustments captured material

deferrals in lodgements of returns for

self-assessed taxes as part of the COVID-19

stimulus packages up until the date of signing the

financial statements

• assessed the methodology and assumptions

used to estimate the allowance related to taxation

receivable against historical recoverability rates

and write-off of debt for reasonableness

• recalculated the allowance for impairment

recognised for mathematical accuracy






Authorisation to incur expenditure

The COVID-19 Legislation Amendment (Emergency

Measures – Treasurer) Act 2020 amended the State’s

financial management and reporting legislation to

ensure agency funding is available until the NSW

Budget and Appropriation Bill for 2020–21 is passed,

planned for 17 November 2020.

I consider this to be a key audit matter because:

• use of the State’s funds must be legally

authorised

• funding is required to ensure the State continues

to meet its debts as and when they fall due.


• ensuring funds spent by the State were legally

authorised.

Other Information

The New South Wales Report on State Finances for the year ended 30 June 2020 includes other

information in addition to the financial statements and my Independent Auditor’s Report thereon. The

Treasurer is responsible for the other information.

My opinion on the financial statements does not cover the other information. Accordingly, I do not

express any form of assurance conclusion on the other information.

In connection with my audit of the financial statements, my responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with the

financial statements or my knowledge obtained in the audit, or otherwise appears to be materially

misstated.

If, based on the work I have performed, I conclude there is a material misstatement of the other

information, I must report that fact.

I have nothing to report in this regard.

Treasurer’s Responsibilities for the Financial Statements

The Treasurer is responsible for the preparation and fair presentation of the financial statements in

accordance with Australian Accounting Standards and the PF&A Act, and for such internal control as

the Treasurer determines is necessary to enable the preparation and fair presentation of the financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Treasurer is responsible for assessing the General

Government Sector and Total State Sectors’ ability to continue as a going concern, disclosing as

applicable, matters related to going concern and using the going concern basis of accounting.

Auditor’s Responsibilities for the Audit of the Financial Statements

My objectives are to:

• obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error

• issue an Independent Auditor’s Report including my opinion.

Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in

accordance with Australian Auditing Standards will always detect material misstatements.

Misstatements can arise from fraud or error. Misstatements are considered material if, individually or

in aggregate, they could reasonably be expected to influence the economic decisions users take

based on the financial statements.


A description of my responsibilities for the audit of the financial statements is located at the Auditing

and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar5.pdf. The

description forms part of my auditor’s report.

The scope of my audit does not include, nor provide assurance:

• that the New South Wales General Government Sector and Total State Sector carried out their

activities effectively, efficiently and economically

• about the assumptions used in formulating the budget figures disclosed in the financial

statements

• about the security and controls over the electronic publication of the audited financial

statements on any website where they may be presented

• about any other information which may have been hyperlinked to/from the financial statements.

Margaret Crawford

Auditor-General for New South Wales

17 November 2020

SYDNEY


http://www.auasb.gov.au/auditors_responsibilities/ar5.pdf

The NSW Consolidated Statement of Comprehensive Income for the Year Ended 30 June 2020


GeneralGovernment Sector Total State Sector

2019-20 2018-19 Restated(a)

2019-20 2018-19 Restated(a)

FROM CONTINUING OPERATIONS Note $m $m $m $m

Revenue from Transactions

Taxation(a) 2 29,941 31,026 29,939 31,040Grants and Subsidies Commonwealth General Purpose 2 18,073 17,907 18,073 17,907 Commonwealth Specific Purpose Payments 2 11,278 10,224 11,278 10,224 Commonwealth National Partnership Payments 2 3,886 2,737 3,886 2,737 Other Grants and Subsidies 2 1,068 981 990 900Sale of Goods and Services(a) 2 8,713 9,745 14,155 15,225Interest 2 364 491 610 801Dividend and Income Tax Equivalents from Other Sectors 2 1,354 1,932 ... ...Other Dividends and Distributions 2 2,426 1,934 2,641 2,025Fines, Regulatory Fees and Other(a) 2 4,262 4,679 4,729 5,234Total Revenue from Transactions 81,367 81,655 86,302 86,093

Expenses from Transactions

Employee 3 35,555 33,158 38,112 35,544Superannuation Superannuation Interest Cost 3 882 1,412 927 1,466 Other Superannuation 3 3,288 3,052 3,517 3,250Depreciation and Amortisation(a) 3 5,948 5,171 9,159 7,964Interest 3 2,084 1,812 3,197 3,137Other Operating Expense 3 23,156 21,146 26,961 24,805Grants and Subsidies Recurrent Grants and Subsidies 3 16,369 13,595 13,299 10,921 Capital Grants 3 1,001 1,105 839 741Total Expenses from Transactions 88,283 80,450 96,011 87,828

Transactions from Discontinuing Operations 5 ... ... ... 8

NET RESULT FROM TRANSACTIONS - NET OPERATING BALANCE (BUDGET RESULT FOR THE GENERAL GOVERNMENT SECTOR)

(6,916) 1,206 (9,709) (1,727)

(a) Refer Note 32: Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period.

The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

The NSW Consolidated Statement of Comprehensive Income for the Year Ended 30 June 2020


General Government Sector Total State Sector

2019-20 2018-19 Restated(a)

2019-20 2018-19 Restated(a)

Note $m $m $m $m

NET OPERATING BALANCE (6,916) 1,206 (9,709) (1,727)

OTHER ECONOMIC FLOWS - INCLUDED IN THE OPERATING RESULT

Gain/(Loss) from Liabilities 4 (201) (2,500) (626) (3,218)Other Net Gains/(Losses) 4 (2,553) 13,700 (4,603) 11,332Share of Earnings/(Losses) from Equity Investments (excl. Dividends) 4 46 (1) 45 (1)Dividends from Asset Sale Proceeds 4 31 (0) ... ...Deferred Income Tax from Other Sectors 4 (123) (97) ... ...Other 4 (212) 14 (218) 10Discontinuing Operations - Other Economic Flows 5 ... (0) ... (0)Other Economic Flows - included in Operating Result (3,013) 11,117 (5,402) 8,123

OPERATING RESULT (9,929) 12,322 (15,111) 6,395

OTHER ECONOMIC FLOWS - OTHER COMPREHENSIVE INCOME

Items that will not be Reclassified to Operating Result

Revaluations(a) 14 4,263 7,154 4,540 7,275Share of Associate's Other Comprehensive Income/(Loss) that will not be Reclassified Subsequently to Operating Result ... (10) ... (10)Actuarial Gain/(Loss) from Superannuation 23 (673) (13,364) (690) (14,120)Net Gain/(Loss) on Equity Instruments at Fair Value through Other Comprehensive Income(a) (4,979) (7,950) (0) (618)Deferred Tax Direct to Equity 15 151 ... ...

Items that may be Reclassified Subsequently to Operating Result

Net Gain/(Loss) on Financial Instruments at Fair Value (8) 19 (14) 16Share of Associate's Other Comprehensive Income/(Loss) that may be Reclassified Subsequently to Operating Result (243) (538) (243) (538)Other 1,171 165 1,136 (450)Other Economic Flows - Other Comprehensive Income (454) (14,372) 4,729 (8,446)

COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS (10,382) (2,050) (10,382) (2,050)

KEY FISCAL AGGREGATES


Less: Net Other Economic Flows 3,466 3,256 673 323NET OPERATING BALANCE (6,916) 1,206 (9,709) (1,727)

Less: Net Acquisition of Non-Financial Assets

Purchases of Non-Financial Assets 18,070 16,464 22,283 21,668 Sales of Non-Financial Assets (639) (966) (903) (1,317) Less: Depreciation and Amortisation(a) (5,948) (5,171) (9,159) (7,964) Plus: Change in Inventories 839 38 927 (34) Plus: Other Movements in Non-Financial Assets

Assets Acquired Using Leases 2,915 159 2,990 159Other(a) (92) (38) 259 357

Equals Total Net Acquisition of Non-Financial Assets 15,145 10,485 16,396 12,868

EQUALS: NET LENDING/(BORROWING) (22,061) (9,280) (26,105) (14,595)


The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

The NSW Consolidated Statement of Changes in Equity for the Year Ended 30 June 2020


2019-20 Equity at 1 July 2019

Correction to Prior Period(a)

Equity at 1 July 2019

Restated(a)

Changes in Accounting Standards

and Policy at1 July 2019(b)

Comprehensive Result(b)

Transfers between

equity classes

Equity at 30 June

2020$m $m $m $m $m $m $m


Accumulated Funds 75,368 355 75,722 1,103 (10,518) 1,172 67,478

Reserves Asset Revaluation Surplus 97,202 (1,039) 96,163 ... 4,263 (1,172) 99,254

Equity Investment Revaluation Surplus/Hedge Reserve in Associate (556) ... (556) ... (243) (0) (799)

Hedging Reserve 1 ... 1 ... (8) 0 (7)

Financial Assets at Fair Value through Other Comprehensive Income 78,155 (417) 77,738 (66) (4,913) ... 72,759

Other 0 ... 0 ... ... (0) ...

250,172 (1,102) 249,070 1,037 (11,419) ... 238,688

Total State Sector

Accumulated Funds 92,438 66 92,503 1,061 (15,702) 2,187 80,048

Reserves Asset Revaluation Surplus 158,293 (1,167) 157,126 (24) 4,540 (2,221) 159,421 Equity Investment Revaluation Surplus/Hedge Reserve in Associate (556) ... (556) ... (243) (0) (799)

Hedging Reserve (1) ... (1) ... (14) 0 (15) Financial Assets at Fair Value through Other Comprehensive Income ... ... ... ... (0) ... (0)

Other ... ... ... ... ... 34 34

250,172 (1,102) 249,070 1,037 (11,419) ... 238,688

2018-19 Equity at 1 July 2018



Restated(a)


and Policy at 1 July 2018(b)

Comprehensive Result(b)

Transfers between

equity classes

Equity at 30 June

2019$m $m $m $m $m $m $m


Accumulated Funds(a) 76,243 367 76,610 14 (715) (187) 75,722

Reserves Asset Revaluation Surplus(a) 90,248 (988) 89,260 ... 7,154 (250) 96,163 Equity Investment Revaluation Surplus/Hedge Reserve in Associate 25 ... 25 ... (548) (33) (556)

Hedging Reserve (17) ... (17) ... 19 (0) 1

Available for Sale Reserve 85,597 ... 85,597 (85,597) ... ... ... Financial Assets at Fair Value through Other Comprehensive Income(a) ... (355) (355) 85,573 (7,950) 470 77,738

Other ... ... ... ... ... 0 0

252,095 (976) 251,119 (10) (2,040) ... 249,070

Total State Sector

Accumulated Funds(a) 99,680 12 99,692 (1) (8,165) 977 92,502

Reserves Asset Revaluation Surplus(a) 152,341 (988) 151,353 ... 7,275 (1,503) 157,126 Equity Investment Revaluation Surplus/Hedge Reserve in Associate 25 ... 25 ... (548) (33) (556)

Hedging Reserve (135) ... (135) ... 16 118 (1)

Available for Sale Reserve 157 ... 157 (157) ... ... ... Financial Assets at Fair Value through Other Comprehensive Income ... ... ... 148 (618) 470 ...

Other 28 ... 28 ... ... (28) ...

252,095 (976) 251,119 (10) (2,040) ... 249,070

(a) Refer Note 32: Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period.(b) The Consolidated Statement of Comprehensive Income includes AASB 15, AASB 16 and AASB 1058 (2018-19: AASB 9) transition

adjustments in ‘other comprehensive income'.

The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

The NSW Consolidated Statement of Financial Position as at 30 June 2020


General Government Sector Total State Sector

2019-20 2018-19 Restated(a)

1 July 2018Restated(a)

2019-20 2018-19 Restated(a)

1 July 2018Restated(a)

Note $m $m $m $m $m $m

ASSETS

Financial Assets

Cash and Cash Equivalents 6 6,134 1,969 5,417 10,717 8,979 13,969Receivables 7 11,281 7,491 6,721 11,146 7,527 6,547Investments, Loans and Placements Financial Assets at Fair Value 9 40,874 43,333 32,578 45,909 44,560 37,643 Other Financial Assets 9 1,533 2,591 5,556 1,784 2,793 4,456Advances Paid 10 1,239 1,193 1,017 776 715 644Tax Equivalents Receivable 17 15 32 128 ... ... ...Deferred Tax Equivalents Asset 17 2,127 2,245 2,192 ... ... ...Equity Investments Investments in Other Public Sector Entities(a) 11 100,249 98,573 112,556 0 0 ... Investments in Associates 11 11,866 12,055 5,987 11,866 12,057 5,988 Other Equity Investments 11 7 8 722 21,741 24,468 20,420Total Financial Assets 175,326 169,490 172,873 103,940 101,099 89,666

Non-Financial Assets

Contract Assets 8 24 ... ... 24 ... ...Inventories 12 1,188 399 327 1,743 873 826Forestry Stock and Other Biological Assets 14 10 9 841 1,181 993Assets Classified as Held for Sale 13 286 222 320 335 283 430Investment Properties ... ... … 676 648 644Property, Plant and Equipment Land and Buildings(a) 14 94,822 90,748 84,084 168,502 166,346 161,627 Plant and Equipment(a) 14 12,538 12,162 11,007 16,657 18,075 17,367 Infrastructure Systems(a) 14 124,406 118,190 101,171 180,197 166,835 157,182Right-of-Use Assets 28 6,503 ... ... 9,349 ... ...Intangibles 15 3,686 3,694 3,691 4,768 4,809 4,745Other Non-Financial Assets(a) 16 6,858 6,266 7,021 7,547 6,449 6,594Total Non-Financial Assets 250,325 231,690 207,630 390,640 365,499 350,408

TOTAL ASSETS 425,651 401,181 380,503 494,580 466,598 440,075

LIABILITIES

Deposits Held 18 69 67 130 144 293 385Payables 19 7,031 7,079 7,251 8,148 8,357 8,833Contract Liabilities 8 1,156 ... ... 1,259 ... ...Liabilities Directly Associated with Assets Held for Sale ... ... ... ... ... ...Borrowings and Derivatives at Fair Value 20 392 207 5 98,358 72,757 63,836Borrowings at Amortised Cost 21 67,885 37,656 32,441 15,425 7,151 7,457Advances Received 696 756 797 696 756 797Employee Provisions 22 22,566 20,802 18,015 23,817 21,969 19,106Superannuation Provision 23 67,890 67,696 54,200 70,951 70,711 56,421Tax Equivalents Payable 17 80 3 3 ... ... ...Deferred Tax Equivalent Provision 17 82 108 112 ... ... ...Other Provisions 24 14,101 11,604 10,210 21,786 18,185 15,400Other Liabilities 25 5,015 6,134 6,223 15,307 17,350 16,721TOTAL LIABILITIES 186,964 152,110 129,385 255,892 217,528 188,956

NET ASSETS 238,688 249,070 251,119 238,688 249,070 251,119

NET WORTH

Accumulated Funds(a) 67,479 75,722 76,610 80,048 92,503 99,692Reserves(a) 171,209 173,348 174,509 158,639 156,567 151,427TOTAL NET WORTH 238,688 249,070 251,119 238,688 249,070 251,119

OTHER FISCAL AGGREGATES Net Debt 19,261 (10,401) (11,195) 55,437 23,909 15,762

Net Financial Liabilities 111,887 81,194 69,068 151,953 116,429 99,289


The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

The NSW Consolidated Statement of Cash Flows for the Year Ended 30 June 2020


General Government Sector Total State Sector(a) 2019-20 2018-19 2019-20 2018-19

Note $m $m $m $m

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts

Taxation(a) 28,346 30,603 28,370 30,636 Sale of Goods and Services(a) 8,878 9,908 14,167 15,752 Grants and Subsidies 33,775 31,810 33,710 31,723 Interest 291 518 674 862 Dividends and Income Tax Equivalents from Other Sectors 1,139 1,897 0 (0) Other(a) 12,559 12,094 13,914 13,581Total Receipts 84,988 86,830 90,835 92,554

Payments

Employee Related (34,083) (31,896) (36,542) (34,235) Superannuation (4,649) (4,325) (4,893) (4,542) Payments for Goods and Services (21,291) (20,874) (24,779) (23,747) Grants and Subsidies (16,180) (13,739) (12,988) (10,701) Interest (1,839) (1,455) (2,806) (2,897) Other (7,231) (7,213) (9,207) (7,914)Total Payments (85,272) (79,502) (91,216) (84,037)

NET CASH FLOWS FROM OPERATING ACTIVITIES 6 (284) 7,328 (381) 8,517

CASH FLOWS FROM INVESTING ACTIVITIES


Proceeds from Sale of Non-Financial Assets 223 452 487 807 Purchases (17,252) (18,087) (21,557) (23,298)Net Cash Flows from Investments in Non-Financial Assets (17,029) (17,635) (21,070) (22,492)

Financial Assets (Policy Purposes)

Receipts 2,768 18,026 2,711 17,995 Payments (4,739) (2,341) (2,775) (1,679)Net Cash Flows from Investments in Financial Assets (Policy Purposes) (1,971) 15,685 (63) 16,316

Financial Assets (Liquidity Purposes)

Proceeds from Sale of Investments 6,131 10,029 4,298 12,618 Purchase of Investments(b) (4,313) (23,904) (2,749) (28,126)Net Cash Flows from Investments in Financial Assets (Liquidity Purposes)(b) 1,818 (13,875) 1,549 (15,508)

NET CASH FLOWS FROM INVESTING ACTIVITIES(b) (17,181) (15,825) (19,584) (21,684)

CASH FLOWS FROM FINANCING ACTIVITIES

Advances Received 21 56 21 56 Advances Repaid (98) (125) (98) (125) Proceeds from Borrowings 22,943 5,561 102,751 64,090 Repayments of Borrowings (1,253) (612) (80,950) (55,885) Deposits Received/(Paid) - Net 2 19 (47) (2) Other - Net 15 151 (4) 30NET CASH FLOWS FROM FINANCING ACTIVITIES 21,630 5,050 21,672 8,164

NET INCREASE IN CASH AND CASH EQUIVALENTS(b) 4,165 (3,448) 1,708 (5,003)

Opening Cash and Cash Equivalents 1,969 5,417 8,979 13,969Reclassification of Cash Equivalents and Other Adjustments (0) (1) 30 12CLOSING CASH AND CASH EQUIVALENTS(b) 6 6,134 1,969 10,717 8,979

DERIVATION OF CASH RESULT

Net Cash Flows from Operating Activities (284) 7,328 (381) 8,517Net Cash Flows from Investments in Non-Financial Assets (17,029) (17,635) (21,070) (22,492)CASH SURPLUS/(DEFICIT) (17,312) (10,307) (21,451) (13,975)

(a) The Consolidated Statement of Cash Flows is presented to include both continuing and discontinued operations; amounts related todiscontinued operations are disclosed in Note 5: Discontinued Operations.

(b) Refer Note 32: Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period.

The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Notes to the Financial Statements


Notes to the Financial Statements

Accounting Policies

Note 1: Statement of Significant Accounting Policies ............................................................................ 4 - 17

Statement of Comprehensive Income

Note 2: Revenue ..................................................................................................................................... 4 - 31 Note 3: Expenses ................................................................................................................................... 4 - 46 Note 4: Other Economic Flows Included in the Operating Result ........................................................... 4 - 49 Note 5: Discontinued Operations ........................................................................................................... 4 - 50

Assets

Note 6: Cash and Cash Equivalents ....................................................................................................... 4 - 51 Note 7: Receivables ................................................................................................................................ 4 - 56 Note 8: Contract Balances ...................................................................................................................... 4 - 57 Note 9: Investments, Loans and Placements .......................................................................................... 4 - 58 Note 10: Advances Paid ........................................................................................................................... 4 - 60 Note 11: Equity Investments ..................................................................................................................... 4 - 61 Note 12: Inventories .................................................................................................................................. 4 - 65 Note 13: Assets Classified as Held for Sale .............................................................................................. 4 - 66 Note 14: Property, Plant and Equipment .................................................................................................. 4 - 67 Note 15: Intangibles .................................................................................................................................. 4 - 82 Note 16: Other Non-Financial Assets ....................................................................................................... 4 - 85 Note 17: Income Tax Equivalents ............................................................................................................. 4 - 87

Liabilities

Note 18: Deposits Held ............................................................................................................................. 4 - 88 Note 19: Payables .................................................................................................................................... 4 - 88 Note 20: Borrowings and Derivative Liabilities at Fair Value..................................................................... 4 - 89 Note 21: Borrowings at Amortised Cost .................................................................................................... 4 - 90 Note 22: Employee Provisions .................................................................................................................. 4 - 91 Note 23: Superannuation Provisions ........................................................................................................ 4 - 93 Note 24: Other Provisions ......................................................................................................................... 4 - 104 Note 25: Other Liabilities........................................................................................................................... 4 - 109

Financial Instruments

Note 26: Financial Instruments ................................................................................................................. 4 - 111

Other Information

Note 27: Trusts Under Management ......................................................................................................... 4 - 136 Note 28: Leases ........................................................................................................................................ 4 - 136 Note 29: Expenditure Commitments ......................................................................................................... 4 - 146 Note 30: Contingent Assets and Contingent Liabilities ............................................................................. 4 - 147 Note 31: Events after the Reporting Period .............................................................................................. 4 - 153 Note 32: Restatement/Corrections to Prior Years ..................................................................................... 4 - 154 Note 33: Related Party Disclosures .......................................................................................................... 4 - 160

Budgetary Information

Note 34: Budgetary Information on 2019-20 General Government Sector Financial Statements ............. 4 - 161

Government Finance Statistics

Note 35: Disaggregated Financial Statements .......................................................................................... 4 - 171 Note 36: Key Fiscal Aggregates and Reconciliations to Government Finance Statistics .......................... 4 - 185 Note 37: Details of Consolidated Entities .................................................................................................. 4 - 188

Details of Consolidated Entities and Key Terms

Note 38: Key Technical Terms used in the Financial Statements ............................................................. 4 - 192

Note 1


Note 1: Statement of Significant Accounting Policies

Scope

The Total State Sector comprises the General Government Sector, the Public Non-Financial Corporation (PNFC) Sector and the Public Financial Corporation (PFC) Sector. These sectors are determined in accordance with the principles and rules contained in the Australian Bureau of Statistics Australian System of Government Finance Statistics: Concepts, Sources and Methods 2015 (cat. No.5514) (ABS GFS Manual) as amended from time to time.

The New South Wales Total State Sector and General Government Sector have applied, where appropriate, not-for-profit Australian accounting standards.

The financial statements of the Total State Sector and General Government Sector for the year ended 30 June 2020 were authorised for issue by the Treasurer on 17 November 2020. This report was issued from:

Treasury 52 Martin Place Sydney NSW 2000 AUSTRALIA

Note 1


Basis of Preparation

The Total State Sector financial statements are general purpose financial reports. The purpose of these financial statements is to provide users with information about the stewardship of the NSW Government in relation to the Total State Sector and General Government Sector. It also provides information that facilitates assessments of the macroeconomic impact of the State.

The financial statements of the Total State Sector and the General Government Sector have been prepared in accordance with:

applicable Australian Accounting Standards (which include paragraphs applicable to not-for-profit entities and Australian Interpretations), in particular, AASB 1049 Whole of Government and General Government Sector Financial Reporting (AASB 1049); and

section 6 of the Public Finance and Audit Act 1983. The financial statements of the Total State Sector and the General Government Sector are prepared using the accrual basis of accounting, which recognises the effect of transactions and events when they occur. Property, plant and equipment, investment property, assets (or disposal groups) held-for-sale and financial instruments not measured at amortised cost are measured at fair value. Other financial statement items are prepared in accordance with the historical cost convention, except where specified otherwise.

In accordance with AASB 1049, the financial statements of the General Government Sector are included as a separate column adjacent to the Total State Sector financial information. AASB 1049 harmonises Government Finance Statistics (GFS) with Generally Accepted Accounting Principles (GAAP) to the extent that GFS does not conflict with GAAP. This requires the selection of options within the Australian Accounting Standards that harmonise with the ABS GFS Manual. A glossary of key technical terms used in the financial statements, including relevant GFS terminology, is included in Note 38: Key Technical Terms used in the Financial Statements.

The financial statements are presented in Australian dollars and all amounts are rounded to the nearest million dollars ($m), except when otherwise indicated.

Use of a zero (‘0’) represents amounts rounded down to zero. Use of three dots (‘…’) represents nil amounts.

Tables may not add in all instances due to rounding.

Significant Changes in the 2019-20 Reporting Period

The consolidated financial position and comprehensive result of the State were particularly affected by the following events occurring during the 2019-20 reporting period:

The coronavirus (COVID-19) outbreak which developed rapidly during 2019-20 with devastating impacts on communities within the State and across the globe. Measures taken by the State to contain COVID-19 affected economic activity and as a result have had a pervasive impact on the recognition and measurement of financial report transactions and balances.

Natural disaster events (including bushfires) which resulted in revaluation losses and impairment of assets; and

The adoption of new accounting standards for leases, revenue and non-for-profit income. The Report on State Finances chapters on the General Government Sector Results and Total State Sector Results provide a detailed review on the State’s financial position and comprehensive result for the 2019-20 financial year.

Principles of Consolidation

The Total State Sector Accounts (TSSA) consolidate all assets, liabilities, equities, revenues and expenses of the NSW Government including those of entities controlled by the State, in accordance with AASB 10 Consolidated Financial Statements (AASB 10). The General Government Sector financial statements consolidate only those entities within the General Government Sector, using the consolidation procedures specified in AASB 10.

The State controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The State re-assesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of control. The financial statements of the controlled entities are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

Note 1


Under AASB 1049, the General Government Sector financial statements are not required to apply the full requirements of AASB 10 and AASB 9 Financial Instruments (AASB 9). Instead of consolidating the PNFCs and PFCs on a line by line basis, the General Government Sector financial statements recognise an asset, being the equity investment in those entities. The gain or loss for changes in the carrying amount of the investment from period to period is accounted for as if the change in carrying amount is a change in fair value and accounted for in a manner consistent with AASB 9. The General Government Sector has irrevocably elected to account for the change in the carrying amount of these investments in a manner consistent with the treatment of equity instruments measured at fair value through other comprehensive income (FVOCI) in AASB 9 that would otherwise be measured at fair value through profit or loss (FVTPL).

Entities which are not controlled by the State, including local government bodies, universities, certain reserve trusts created under the Crown Land Management Act 2016, hospitals listed under Schedule 3 of the Health Services Act 1997, the State's Superannuation Funds, trust funds under management that are not controlled, the NSW Aboriginal Land Council and most professional registration and marketing authorities, are not consolidated into the financial statements of the State. In preparing consolidated financial statements, all transactions and balances between NSW government agencies (for the TSSA) and between General Government Sector agencies (for the General Government Sector financial statements) have been eliminated. Where agencies adopt dissimilar accounting policies and their effect is considered material, adjustments are made to ensure consistent policies are adopted.

If the State loses control over an entity, it derecognises the related assets (including goodwill), liabilities and other components of equity, while any resultant gain or loss is recognised in the operating result. Any investment retained is recognised at fair value.

Details of consolidated entities are included in Note 37: Details of Consolidated Entities.

Presentation in the 2019-20 Financial Statements

All amounts are rounded to the nearest one million dollars and are expressed in Australian currency, which is the State’s presentation and functional currency.

Previous year balances have been reclassified in a number of notes to better reflect the nature of the transactions.

Consolidated Statement of Comprehensive Income Presentation

All amounts included in the comprehensive result (total change in net worth before transactions with owners as owners) are classified as ‘transactions’ or ‘other economic flows’ consistent with the principles in the ABS GFS Manual and AASB 1049.

‘Transactions’ are a result of mutually agreed interactions between parties. ‘Other economic flows’ result from a change in the volume or value of an asset or liability that does not result from a ‘transaction’, including revaluations resulting from changes in market prices and other gains and losses that result from changes in the volume of assets.

‘Other economic flows’ are separated between those recognised in the operating result and those recognised in other comprehensive income.

Revenue

Revenues are transactions that result in increases of net worth. The specific policies adopted for the recognition of significant categories of revenue are discussed in Note 2: Revenue.

Expenses

Expenses are transactions that result in a reduction of net worth. The specific policies adopted for the recognition of significant categories of expenses are discussed in Note 3: Expenses.

Note 1


Volunteer Services

Under AASB 1058 Income of Not-for-Profit Entities (AASB 1058), receipt of volunteer services is recognised as an asset or expense when the fair value of those services can be reliably measured, and the services would have been purchased if not donated. The operations of volunteer services are dependent on the services provided by volunteer firefighters, emergency service volunteers, and other volunteers. Their contributions are essential to the provision of comprehensive, efficient and effective emergency services throughout NSW.

The contribution and cost of these volunteer services have not been recognised by the State as the services donated would not have been purchased. The State does not currently purchase alternative services when volunteer numbers fluctuate.

Consolidated Statement of Financial Position Presentation

Assets

Assets recognised in the Consolidated Statement of Financial Position are classified into financial and non-financial assets, in order of liquidity.

Liabilities

Liabilities in the Consolidated Statement of Financial Position are presented in order of liquidity.

Current/Non-Current Classification

Assets and liabilities are classified as either 'current' or 'non-current' in the associated notes of the Statement of Financial Position.

Assets are classified as 'current' where their carrying amount is expected to be realised within 12 months after the reporting date. Liabilities are classified as 'current' when they are due to be settled within 12 months after the reporting date, or the controlled entity does not have an unconditional right to defer settlement to beyond 12 months after the reporting date.

All other assets and liabilities are classified as non-current.

Valuation Techniques, Inputs and Processes

A number of the State’s accounting policies and disclosures require the measurement of both financial and non-financial assets and liabilities at fair value. Agencies are responsible for determining the appropriate valuation techniques, inputs and processes to be undertaken to determine the fair value of their financial assets and liabilities in accordance with AASB 13 Fair Value Measurement (AASB 13).

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability.

When measuring fair value in accordance with AASB 13, the valuation technique used maximises the use of relevant observable inputs and minimises the use of unobservable inputs.

Under AASB 13, the State categorises, for disclosure purposes, the valuation techniques based on the inputs used in the valuation techniques as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the State can access at the measurement date;

Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly;

Level 3 – inputs that are not based on observable market data (unobservable inputs).

Note 1


The State recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Refer to the relevant notes for further disclosures regarding fair value measurements of financial and non-financial assets. Transfers between levels within the fair value hierarchy during the year are disclosed in Note 14: Property, Plant and Equipment and Note 26: Financial Instruments.

Significant Accounting Estimates and Judgements

The Total State Sector Accounts are prepared in accordance with Australian Accounting Standards. Judgement, estimates and assumptions are required to be made that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on professional judgements derived from historical experience, independent valuations and/or various other factors that are believed to be reasonable under the circumstances. The results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from market observable data. Actual results may differ from these estimates.

Judgements, key assumptions and estimations that have been made in the preparation of the financial statements are outlined below and/or disclosed in the relevant notes to the financial statements:

the recognition and classification of transactions that are/contain a donation or a contract with a customer (refer to Note 2: Revenue);

the recognition of revenue and allocation of the transaction price for contracts with customers (refer to Note 2: Revenue);

the accounting of equity investments (refer to Note 11: Equity Investments);

the classification of non-current assets (or disposal groups) as held for sale (refer to Note 13: Assets Classified as Held for Sale);

the fair value and useful lives of land, buildings, infrastructure systems, plant and equipment where applicable (refer to Note 14: Property, Plant and Equipment);

recognition of impairment for non-financial assets (refer to Note 14: Property, Plant and Equipment and Note 15: Intangibles);

actuarial assumptions for employee benefit provisions and superannuation liabilities that are based on the likely tenure of existing staff, patterns of leave claims, future salary movements and future discount rates (refer to Note 22: Employee Provisions and Note 23: Superannuation Provisions);

the estimation of provisions for outstanding claims (refer to Note 24: Other Provisions);

the estimation of fair value for certain financial assets and financial liabilities and the estimation of expected credit losses (ECLs) for receivables and other financial assets at amortised cost (refer to Note 26: Financial Instruments);

the estimation of uncertainties made in relation to lease accounting (refer to Note 28: Leases);

recognition and classification of finance and operating leases by the State in its capacity as a lessor (refer to Note 28: Leases); and

an assessment of contingent liabilities, commitments and guarantees (refer to Note 30: Contingent Assets and Contingent Liabilities).

Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods that are affected by the revision. Estimates and judgements are continually evaluated.

Impact of Natural Disaster Events and COVID-19

The State of NSW has been impacted by bushfires, drought, and the global COVID-19 pandemic throughout the 2019-20 financial year.

The developing nature of the economic, societal, and policy outcomes that will arise from natural disaster and COVID-19 events has required the State to re-evaluate balances requiring the use of judgement, estimates and assumptions. Revisions to judgements and estimates from this review have been applied in the recognition and measurement of the State’s assets and liabilities for conditions that existed at the end of the reporting period and may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year.

Note 1


The areas involving significant estimates or judgements that have been impacted by natural disaster events and COVID-19 are as follows:

Financial Assets Receivables, Advances Paid, and Other Financial Assets

Credit risk has increased in the current environment. Government responses to natural disaster events and COVID-19, including the deferral of payments of statutory receivables, have also impacted expected credit losses (ECLs) of the State. In response to these events, the State completed credit risk reviews of its receivables, advances paid and other financial assets at amortised cost including the ECLs recognised for each of these balances.

The methodology employed to calculate ECLs has remained unchanged from previous reporting periods. The inputs into these calculations, including forward-looking information on macroeconomic factors affecting the ability of debtors to settle outstanding amounts, have however been revised. There is no material impact on ECLs due to COVID-19 as at 30 June.

Financial Assets at Fair Value, and Borrowings and Derivatives at Fair Value

COVID-19 has resulted in changes in market prices and cash flows forecasts, as well as greater risks and uncertainties in financial markets. In response, the State has reviewed the appropriateness of inputs used in the valuation of financial assets and liabilities measured at fair value. Increased uncertainty in valuation assumptions due to COVID-19 has also required the State to consider the classification and transfer of financial assets and liabilities within the fair value hierarchy and level 3 movement reconciliation.

Inventories

Inventories have increased by $870 million for the State, primarily due to the Ministry of Health’s increase in surgical supplies to prepare, test and treat suspected and confirmed COVID-19 patients. Inventories held for distribution for COVID-19 are also consumed as part of the normal services provided by the Ministry of Health.

Market demand has increased the weighted average cost of inventories in medical and surgical supplies due to COVID-19. The State assessed whether inventories held for distribution experienced any loss of service potential as a result of COVID-19. This assessment was completed by reviewing the current replacement cost and functional / technical obsolescence of inventories on hand. Market demand for these items is expected to continue and as a result the carrying amount and current replacement cost are aligned, and no material loss of service potential was evident for the State.

Forestry Stock and Other Biological Assets

During the 2019-20 bushfires, approximately 57,000 hectares of softwood plantations, 5,000 hectares of hardwood plantations and 831,000 hectares of native forests was burnt. Given the impacts of these events, these assets were revalued to their fair value less costs to sell in accordance with AASB 13 Fair Value Measurement (AASB 13) and AASB 141 Agriculture (AASB 141) as at 30 June 2020. Losses recognised in ‘other economic flows included in the operating result’ due to forestry stock revaluations as a result of bushfire related damage totalled $371 million for the Total State Sector.

Property, Plant and Equipment

Some property, plant and equipment of the State were destroyed or damaged by bushfire events occurring throughout the 2019-20 financial year. Additional stock-taking procedures were completed to identify and dispose of destroyed assets. Impairment testing and revaluations reviews were performed to recalculate the carrying amount of damaged property, plant and equipment where service potential was reduced by bushfire activity. No material adjustments have been recorded in 2019-20.

In response to COVID-19, the State also reviewed the continual appropriateness of property, plant and equipment valuation approaches and techniques in the current recessionary environment.

Note 1


Right-of-Use Assets

The State’s right-of-use assets include a portfolio of leased office and commercial building assets. COVID-19 impacted market rentals across the State and the value of these leased assets. The State performed impairment testing to assess whether the carrying amount of these assets exceeded their recoverable amount.

Property NSW manages a large portion of the States leases and sub-leases them to other NSW government agencies. To assess whether right-of-use assets were impaired, Property NSW calculated the net replacement cost of these assets based on the market rent forecasts from JLL Real Estate Intelligence Services (REIS) or Property NSW’s historical rent data for regional markets at the valuation date where the market rent forecast at 30 June 2019 was the base year. Impairment losses of $459 million in the General Government Sector and $478 million in the Total State Sector have been recognised in ‘other economic flows included in the operating result’ due to the impairment assessment.

Employee, Superannuation and Other Provisions

Given recent market volatility, the State assessed the continued appropriateness of inputs, including actuarial assumptions, used in the measurement of employee, superannuation and other provisions. This included a review of discount rates, inflation, salary increases, employee departures / period of service, and mortality rate assumptions. The State has disclosed sensitivity analysis, where required, in response to the increased uncertainties relating to these assumptions. For superannuation provisions, the State has also reviewed the reasonableness of inputs used in the valuation of unlisted plan assets.

NSW Government remains committed to fully funding its superannuation liabilities and is reviewing the timing of contributions to achieve full funding. Reprofiling the Government’s contributions to the State’s defined benefits superannuation schemes is one of the fiscal repair initiatives being considered in response to COVID-19 impacts.

Onerous Contracts

In the economic climate created by COVID-19, the State undertook a review of whether existing contracts had become onerous. This review also included identifying and assessing the impact of any force majeure clauses. The present obligations under onerous contracts identified from this review have been recognised and measured as provisions. There is no material impact due onerous contracts due to COVID-19 as at 30 June.

Going Concern and Funding Considerations

The financial statements continue to be prepared on a going concern basis.

The State has entered into new National Partnership Agreements with the Commonwealth Government in response to COVID-19. These agreements, along with pre-existing funding arrangements, continue to deliver funding to the State for public services. The State has also maintained its triple-A credit rating and accordingly continues to have access to funding through debt markets for its infrastructure asset construction programs at the lowest interest rate possible.

Other Significant Accounting Policies

Financial Instruments

Recognition and Initial Measurement

All ‘regular way’ purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

A financial asset, unless it is a trade receivable without a significant financing component, or financial liability, is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Note 1


Financial Assets - Classification and Subsequent Measurement

Financial assets of the State are classified at initial recognition under AASB 9 as either measured at:

amortised cost;

fair value through other comprehensive income (FVOCI) – debt investment;

fair value through other comprehensive income (FVOCI) – equity investment; or

fair value through profit or loss (FVTPL). Financial assets are classified and measured at amortised cost if they are held for the collection of contractual cash flows solely representing payments of principal and interest.

The State measures debt investments at FVOCI when they are held for both collection of contractual cash flows and for selling the financial asset, and where the asset’s cash flows represent solely payments of principal and interest.

The State may irrevocably elect to classify equity investments at FVOCI, that would otherwise be measured at FVTPL. These equity investments meet the definition of equity instruments under AASB 132 Financial Instruments: Presentation (AASB 132) and are not held for trading. The classification is determined on an instrument-by-instrument basis. Equity investments are designated at FVOCI when the State intends to hold these investments for the medium to long-term or for policy purposes.

Financial assets at FVTPL include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value under AASB 9. Financial assets are held for trading if acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model.

Financial Assets - Subsequent Measurement and Gains and Losses

Financial assets at amortised cost are subsequently measured using the effective interest rate method, less any impairment. Impairment losses are presented in ‘other economic flows – included in the operating result’. Any gain or loss arising on derecognition is also recognised in ‘other economic flows – included in the operating result’ together with foreign exchange gains and losses. Interest is presented as ‘revenue in transactions’ and included in the ‘net operating balance’.

Debt investments at FVOCI are subsequently measured at fair value. Movements in the carrying amount are taken through ‘other economic flows - other comprehensive income’, except for the recognition of impairment and foreign exchange gains and losses which are recognised in ‘other economic flows - included in the operating result’ and interest revenue which is recognised using the effective interest method as ‘revenue from transactions’. When the financial asset is derecognised, the cumulative gain or loss previously recognised in ‘other economic flows - other comprehensive income’ is reclassified from equity to ‘other economic flows - included in the operating result’.

Equity investments at FVOCI are subsequently measured at fair value. Movements in the carrying amount are taken through ‘other economic flows - other comprehensive income’. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as income as part of ‘revenues from transactions’ when the right of payment has been established.

Financial assets at FVTPL are subsequently measured at fair value. A gain or loss on a financial asset that is subsequently measured at FVTPL is recognised in ‘other economic flows – included in the operating result’. A change in fair value excludes interest and distributions, which are recognised as income and included as part of ‘revenues from transactions’.

Financial Assets - Impairment

The State recognises an allowance for expected credit losses (ECLs) for all financial assets, contract assets, guarantees and loan commitments not held at fair value through profit and loss. ECLs are based on the difference between the contractual cash flows and the cash flows that the State expects to receive, discounted at the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

Note 1


For receivables (including leases receivable) and contract assets, the State applies a simplified approach in calculating ECLs. The State recognises a loss allowance based on lifetime ECLs at each reporting date. The State has established a provision matrix based on its historical credit loss experience for these receivables, adjusted for forward looking factors specific to the receivable.

Where the State has no reasonable expectation of recovering an amount owed by a debtor, the debt is written-off by directly reducing the receivable against the loss allowance. This occurs when the State has ceased enforcement activity.

ECLs for all other debt investments not held at fair value through profit or loss are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). The State considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

The State recognises impairment for statutory receivables when there is objective evidence that the State will not be able to collect all amounts due.

Equity instruments designated at FVOCI are not subject to impairment assessments.

Financial Liabilities – Classification, Subsequent Measurement, and Gains and Losses

Financial liabilities are initially measured at fair value, net of directly attributable transactions costs. Financial liabilities are subsequently classified either as measured at amortised cost or at FVTPL.

A financial liability is classified as FVTPL if it is held-for-trading, it is a derivative, or it is designated as such on initial recognition. Fair value changes of borrowings designated at FVTPL are recorded in ‘other economic flows – included in the operating result’, except for movements in fair value due to changes in the State’s own credit risk which are recorded in ‘other economic flows – other comprehensive income’ and are not recycled to the operating result. Interest expense is recorded as ‘expenses from transactions’ and reported in the ‘net operating balance’.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in ‘other economic flows – included in the operating result’ when the liabilities are derecognised. Interest expense is recorded as ‘expenses from transactions’ and reported in the ‘net operating balance’.

Derivative Financial Instruments and Hedge Accounting

Derivatives are initially recognised at fair value and are recognised on the Consolidated Statement of Financial Position at trade date (the date the State becomes party to the contractual provisions of the financial instrument concerned).

Derivatives are classified as held for trading unless they are designated as effective hedging instruments.

Where an active market exists, fair values are determined by reference to the specific market quoted prices/yields at reporting date. If no active market exists, judgement is used to select the valuation technique which best estimates fair value by discounting the expected future cash flows arising from the financial instruments to their present value using market yields and margins appropriate to the financial instruments. These margins take into account credit quality and liquidity of the financial instruments.

Gains and losses from derivatives mandatorily classified as held for trading are recognised in ‘other economic flows – included in operating result’.

Derivatives designated as hedges are measured at fair value and are accounted for either as a fair value hedge (i.e. hedge of exposures to changes in fair value) or a cash flow hedge (i.e. hedge of exposure to variability in cash flows). Gains or losses on fair value hedges are recognised in ‘other economic flows – included in operating result’. Gains or losses on the effective portion of cash flow hedges are recognised in ‘other economic flows – other comprehensive income’, until the forecast transaction affects profit or loss and is then recycled into ‘other economic flows – included in operating result’. The ineffective portion of cash flow hedges is also recognised in ‘other economic flows – included in operating result’.

Note 1


Financial Assets and Financial Liabilities - Derecognition

A financial asset (or a part of a financial asset or part of a group of similar financial assets) is derecognised when either the contractual rights to the cash flows from the financial asset expire, if the State transfers its rights to receive cash flows from the asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either:

the State has transferred substantially all the risks and rewards of the asset; or

the State has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control.

When the State has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. Where the State has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset continues to be recognised to the extent of the State’s continuing involvement in the asset. In that case, the State also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the State has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the State could be required to repay.

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in ‘other economic flows – included in the operating result’.

Forestry Stock

Forestry stock is measured on initial recognition and in subsequent periods at fair value less costs to sell in accordance with AASB 141 and AASB 13. The State’s forestry stock primarily consists of plantation timber (softwood). The plantation estate valuation was independently valued this year. The independent valuer has applied a market-based valuation approach, which involves a combination of the sales comparison method and income approach under a discounted cash flow.

Hardwood assets are currently impaired, and the tree crop value is not recognised in the financial statements.

Investment Properties

The State owns properties to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date using the valuation technique that maximises the use of relevant observable inputs.

Gains or losses arising from changes in fair value are included in ‘other economic flows – included in the operating result’ for the period in which they arise. No depreciation is charged on investment properties, however, where material, ‘consumption of capital’ is recognised as an ‘expense from transactions’.

Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in ‘other economic flows – included in the operating result’ in the period of de-recognition.

Management has determined that the following be treated as property, plant and equipment, instead of investment properties:

public housing is treated as property plant and equipment because the properties are held to provide a social service rather than for investment purposes; and

properties sub-leased within the NSW public sector held by Property NSW are treated as property plant and equipment because the properties are held to provide a service rather than for investment purposes.

Note 1


Accounting for the Goods and Services Tax (GST)

In accordance with Interpretation 1031 Accounting for the Goods and Services Tax, revenues, expenses and assets are recognised net of the amount of GST, except:

where the amount of GST incurred as a purchaser is not recoverable from the Australian Taxation Office (ATO), it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; and

receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the Consolidated Statement of Financial Position.

Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the ATO is classified as part of operating cash flows. Therefore, cash flows arising from investing and financing activities are included net of GST recoverable from or payable to ATO.

Foreign Currency Translation

Transactions in foreign currencies are recorded using the spot rate at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the end of the reporting date. Differences arising on settlement or translation of monetary items are recognised in ‘other economic flows – included in the operating result’.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or ‘other economic flows – included in the operating result’ are also recognised in other comprehensive income or ‘other economic flows – included in the operating result’, respectively).

Changes in Accounting Policy, including New and Amended Standards and Interpretations

The State applied AASB 15 Revenue from Contracts with Customers (AASB 15), AASB 1058 and AASB 16 Leases (AASB 16) for the first time in the current reporting period. The nature and effect of the changes as a result of adopting these new accounting standards are described below and in the relevant notes.

Due to the transition methods chosen by the State in applying these new standards, comparative information has not been restated to reflect the requirements of the new standards.

Several other amendments and interpretations apply for the first time in the 2019-20 financial year, but do not have a material impact on the financial statements of the State.

Apart from standards specified below, the State has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

AASB 15 Revenue from Contracts with Customers

AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations and it applies, with limited exceptions, to all revenue arising from contracts with customers. AASB 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which the State expects to be entitled in exchange for transferring goods or services to a customer.

AASB 15 requires the State to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires relevant disclosures.

Note 1


In accordance with the transition provisions in AASB 15, the State has adopted AASB 15 retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application, i.e. 1 July 2019. The State has also used the transitional practical expedients permitted by the standard to reflect the aggregate effect of all the modifications that occur before 1 July 2018 when:

identifying the satisfied and unsatisfied performance obligations;

determining the transaction price; and

allocating the transaction price to the satisfied and unsatisfied performance obligations. The impact of applying these practical expedients is not expected to significantly affect the financial statements. Refer to Note 2: Revenue for information on the effect of adopting AASB 15 on the financial report for the 2019-20 financial year.

AASB 1058 Income of Not-for-Profit Entities

AASB 1058 replaces most of the existing requirements in AASB 1004 Contributions. The scope of AASB 1004 is now limited mainly to contributions by owners, administrative arrangements and liabilities of government departments assumed by other entities.

AASB 1058 applies to income with a donation component, that is transactions where the consideration to acquire an asset is significantly less than fair value principally to enable a not-for-profit entity to further its objectives, and volunteer services. AASB 1058 adopts a residual approach, meaning that the State must first apply other applicable Australian Accounting Standards (e.g. AASB 15, AASB 16, AASB 9, and AASB 137) to a transaction before recognising income. Not-for-profit entities, such as the State, need to determine whether a transaction is / contains a donation (accounted for under AASB 1058) or a contract with a customer (accounted for under AASB 15). AASB 1058 requires recognition of receipt of an asset, after the recognition of any related amounts in accordance with other Australian Accounting Standards, as income:

when the obligations under the transfer is satisfied, for transfers to enable the State to acquire or construct a recognisable non-financial asset that will be controlled by the State; or

immediately, for all other income within the scope of AASB 1058. In accordance with the transition provisions in AASB 1058, the State has adopted the accounting requirements of AASB 1058 retrospectively with the cumulative effect of initially applying the standard at the date of initial application, being 1 July 2019. The State has adopted the practical expedient in AASB 1058 whereby existing assets acquired for consideration significantly less than fair value principally to enable the entity to further its objectives, are not restated to their fair value. Refer to Note 2: Revenue for information on the impacts of adopting AASB 1058 on the financial report for the 2019-20 financial year.

AASB 16 Leases

AASB 16 supersedes AASB 117 Leases (AASB 117), Interpretation 4 Determining whether an Arrangement contains a Lease (Interpretation 4), Interpretation 115 Operating Leases – Incentives (Interpretation 115) and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease (Interpretation 127). The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise most leases on the balance sheet.

Lessor Accounting

Lessor accounting under AASB 16 is substantially unchanged from AASB 117. The State, in its capacity as a lessor, will continue to classify leases as either operating or finance leases using similar principles as in AASB 117. From 1 July 2019, subleases are classified by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset.

Lessee Accounting

AASB 16 requires the State to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117. As the lessee, the State recognises a lease liability and right-of-use asset at the inception of the lease. The lease liability is measured at the present value of the future lease payments, discounted using the interest rate implicit in the lease, or the lessee’s incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined. The corresponding right-of-use asset is measured at the value of the lease liability adjusted for lease payments before inception, lease incentives, initial direct costs and estimates of costs for dismantling and removing the asset or restoring the site on which it is located.

Note 1


The State has adopted the partial retrospective transition option in AASB 16, where the cumulative effect of initially applying AASB 16 is recognised on 1 July 2019 and the 30 June 2019 comparatives are not restated.

In relation to leases that had previously been classified as ‘operating leases’ under AASB 117, a lease liability is recognised at 1 July 2019 at the present value of the remaining lease payments, discounted using the State’s incremental borrowing rate at the date of initial application.

The corresponding right-of-use asset is initially recorded on transition at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the Consolidated Statement of Financial Position as at 30 June 2019. The exception is right-of-use assets that are subject to accelerated depreciation. These assets are measured at their fair value at 1 July 2019.

For leases previously classified as finance leases, the State recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of initial application. The measurement principles of AASB 16 are only applied after that date.

The State elected to use the practical expedient to expense lease payments for lease contracts that, at their commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is valued at $10,000 or under when new (low-value assets).

In applying AASB 16 for the first time, the State has used the following practical expedients permitted by the standard:

the State has not reassessed whether a contract is, or contains, a lease at 1 July 2019, for those contracts previously assessed under AASB 117 and Interpretation 4;

a single discount rate has been applied to a portfolio of leases with reasonably similar characteristics;

relying on its previous assessment on whether leases are onerous immediately before the date of initial application as an alternative to performing an impairment review;

not recognising a lease liability and right-of-use-asset for short-term leases that end within 12 months of the date of initial application;

excluding the initial direct costs from the measurement of the right-of-use asset at the date of initial application; and

using hindsight in determining the lease term where the contract contained options to extend or terminate the lease.

The State has also adopted the option to not apply AASB 16 to assets that would be classified as service concession assets in accordance with AASB 1059 Service Concession Arrangements: Grantors (AASB 1059). The State continues to apply its existing accounting policy to these assets until AASB 1059 is applied.

Refer to Note 28: Leases for information on the effect of adopting AASB 16 on the financial report at 1 July 2019.

AASB 2019-7 Amendments to Australian Accounting Standards – Disclosure of GFS Measures of Key Fiscal Aggregates and GAAP/GFS Reconciliations

AASB 2019-7 Amendments to Australian Accounting Standards – Disclosure of GFS Measures of Key Fiscal Aggregates and GAAP/GFS Reconciliations (AASB 2019-7) makes amendments to AASB 1049. It provides optional relief for the General Government Sector and Total State Sector financial statements from:

disclosure of the key fiscal aggregates measured in accordance with the ABS GFS Manual where they differ from the key fiscal aggregates measured consistently with Australian Accounting Standards; and

a reconciliation of the two measures of key fiscal aggregates. This Standard applies to annual periods beginning on or after 1 January 2020, with earlier application permitted. The State has elected to early adopt the optional relief requirements of this standard for the 2019-20 financial year. Additional disclosures have been included in Note 36: Key Fiscal Aggregates and Reconciliations to Government Finance Statistics explaining how each key fiscal aggregate is derived and how it differs from its corresponding GFS measure.

Note 1


New Accounting Standards Issued but Not Effective

Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2020 reporting period. The possible impacts of these Standards in the period of initial application are detailed below.

AASB 1059 Service Concession Arrangements: Grantors

AASB 1059 Service Concession Arrangements: Grantor (AASB 1059) is effective for financial reporting periods commencing on or after 1 January 2020. Therefore, for the State AASB 1059 will be effective from 1 July 2020. At the same time NSW Treasury Policy and Guideline Paper TPP 06-8: Accounting for Privately Financed Projects (TPP 06-8) will be withdrawn effective from 1 July 2020. Service concession arrangements (SCAs) are contracts between a grantor and an operator where an operator provides public services related to a service concession asset on behalf of a public sector grantor for a specified period of time and manages at least some of those services. The State will adopt AASB 1059 retrospectively by recognising and measuring service concession assets and related liabilities, with any net adjustments to the amounts of assets and liabilities recognised in accumulated funds at the date of initial application of 1 July 2019. The State estimates that adoption of AASB 1059 will impact the transactions and balances recognised in its statements in future reporting periods as follows. For the General Government Sector, service concession assets of $40,182 million and associated liabilities of $23,178 million will be evident. This includes the reclassification of $22,440 million of existing property plant and equipment and intangible assets and a reclassification of $7,603 million of existing liabilities. This will result in a net increase in accumulated funds of $2,167 million at 1 July 2020. For the period ending 30 June 2021, the total comprehensive result is expected to decrease by $552 million. For the Total State Sector, service concession assets of $42,707 million and associated liabilities of $24,515 million will be evident. This includes the reclassification of $24,213 million of existing property plant and equipment and intangible assets and a reclassification of $8,072 million of existing liabilities. This will result in a net increase in accumulated funds of $2,050 million at 1 July 2020. For the period ending 30 June 2021, the total comprehensive result is expected to decrease by $506 million. In 2021, TPP 06-8 will be withdrawn alongside the introduction of AASB 1059. The State estimates that withdrawal of TPP 06-8 will impact the transactions and balances recognised in its statements in future reporting periods as follows. For the General Government Sector and Total State Sector, additional assets of $1,971 million and liabilities of $1,129 million will be evident. This includes the reclassification of $1,866 million of existing property plant and equipment, intangible assets and reclassification of $1,129 million of existing liabilities. This will result in a net increase in accumulated funds of $105 million at 1 July 2020. For the period ended 30 June 2021, the total comprehensive result is expected to decrease by $15 million. The impact represents the State’s current best estimate and is still under review. It is possible that the amount recognised in the Consolidated Statement of Financial Position as at 1 July 2020 and the Consolidated Statement of Comprehensive Income for the period ended 30 June 2021 will differ from this estimate as a result of further review of underlying SCAs data and contractual arrangements. In particular, the State is still clarifying how the transitional provisions of AASB 1059 apply to certain complex arrangements. There are no other standards that are not yet effective and that are expected to have a material impact on the State’s financial statements in the current or future reporting periods and on foreseeable future transactions.

Note 2


Note 2: Revenue

Taxation

State taxation is recognised under AASB 1058 from 1 July 2019. Government-assessed and taxpayer-assessed taxation income is recognised when the underlying taxable event that results in a right to receive income has occurred, unless it cannot be measured reliably until after the financial statements are authorised for issue.

State taxation is recognised under AASB 1004 until 30 June 2019. Government-assessed taxation income (mainly land tax) is recognised when the underlying event that results in a right to receive income has occurred and assessments have been issued, or when the amount can be reliably measured. Taxpayer-assessed taxation income (including payroll tax and stamp duty) is recognised when the funds are received by the State as this is when the revenues can be reliably measured. Adjustments to revenue, identified after review of taxpayer returns, are recognised upon amended assessment.

General Total Government Sector State Sector

2019-20 2018-19

Restated(a) 2019-20 2018-19

Restated(a)

$m $m $m $m

Taxation - Non-Contractual Income from Statutory Requirements Payroll Tax 8,508 9,357 8,342 9,203 Stamp Duties 8,815 9,245 8,815 9,245 Land Tax 4,477 4,216 4,430 4,167 Gambling and Betting 2,207 2,634 2,207 2,634 Motor Vehicle Taxes(a) 2,344 2,302 2,344 2,302 Other(a) 3,590 3,272 3,801 3,488

29,941 31,026 29,939 31,040

(a) Refer to Note 32: Restatement / Corrections to Prior Years for details of restatements to the prior period.

Note 2


Grants and Subsidies

From 1 July 2019, grants and subsidies are recognised in accordance with the requirements of AASB 15 or AASB 1058, dependent on whether there is a contract with a customer defined by AASB 15.

Revenue from grants with sufficiently specific performance obligations (SSPOs) is recognised under AASB 15 when the State satisfies a performance obligation by transferring the promised goods or services. Grant agreements with SSPOs include certain Commonwealth specific purpose and national partnership agreements (including National Health Reform Funding agreements). The State’s obligations under these agreements primarily relate to the delivery of public health services including clinical trials, research, screening programs, disease surveillance, dental services, immunisation programs and other community health projects. These contractual services are to be provided by the State over the next one to four years.

Revenue from each distinct performance obligation in the contract agreement is primarily recognised over time based on the progress towards satisfaction of the performance obligation. Various methods are employed to recognise revenue over time, depending on the nature and terms and conditions of the grant contract. The most common method applied is the output method which is based on the milestones reached. Payments are provided upon completion of each milestone and submission of the performance report for each completed milestone by the due dates stipulated in the contract agreements and/or its schedules.

Revenue from grants with SSPOs is recognised based on the grant amount specified in the funding agreement/funding approval, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as funding payments are usually received in advance or shortly after the relevant obligation is satisfied.

Refer to Note 8: Contract Balances for the transaction price allocated to the performance obligations that have not been satisfied at the end of the year and the time periods when it is expected to be recognised as revenue.

Income from grants to acquire/construct a recognisable non-financial asset to be controlled by the State is recognised under AASB 1058 when the State satisfies the obligation under the grant transfer. The State primarily satisfies performance obligations under these transfers over time as the non-financial assets are being constructed. The percentage of cost incurred approach is used most often to recognise income, because this most closely reflects the progress of non-financial asset construction and completion. Grants to acquire/construct recognisable non-financial assets primarily relate to Commonwealth funding received for the construction and upgrade of road and transport infrastructure assets.

Income from grants without sufficiently specific performance obligations is recognised under AASB 1058 when the State obtains control over the granted assets recognised under applicable accounting standards (e.g. cash). Such funding includes GST funding, National Partnership Payments, and certain recurrent Specific Purpose payments received from the Commonwealth.

Prior to 1 July 2019, income from grant and subsidies was recognised under AASB 1004 when the State obtained control over the contribution. The State is deemed to have assumed control when the grant is received or receivable. Control is normally obtained when the cash is received.

Note 2


General Total Government Sector State Sector 2019-20 2018-19 2019-20 2018-19 $m $m $m $m

Grants and Subsidies Revenue Commonwealth General Purpose 18,073 17,907 18,073 17,907 Commonwealth Specific Purpose Payments 11,278 10,224 11,278 10,224 Commonwealth National Partnership Payments 3,886 2,737 3,886 2,737 Other Grants and Subsidies 1,068 981 990 900

34,306 31,848 34,228 31,768

Grants Dissected into Current and Capital Components

Current Grants and Subsidies Revenue from the Commonwealth General Purpose(a) 18,073 17,907 18,073 17,907 Specific Purpose 11,278 10,224 11,278 10,224 National Partnership Payments 1,746 1,027 1,746 1,027 Other Commonwealth Payments 454 410 455 410Current Grants from the Commonwealth 31,551 29,568 31,552 29,568Other Grants and Subsidies 601 500 531 429Total Current Grant Revenue 32,152 30,068 32,083 29,997

Capital Grant Revenue from the Commonwealth National Partnership Payments 2,140 1,710 2,140 1,710 Other Commonwealth Payments 2 4 5 6Capital Grants from the Commonwealth 2,142 1,714 2,145 1,716Other Grants and Subsidies 12 66 (0) 55Total Capital Grant Revenue 2,154 1,780 2,145 1,771

34,306 31,848 34,228 31,768

Grants and Subsidies Revenue and Income Recognition Approaches

Grants and Subsidies with Sufficiently Specific Performance Obligations 7,244 ... 7,186 ... Grants and Subsidies Relating to the Acquisition or Construction of Recognisable Non-Financial Assets to be Controlled by the State 2,187 ... 2,187 ... Grants and Subsidies without Sufficiently Specific Performance Obligations 24,875 ... 24,855 ... Grant and Subsidies Recognised under AASB 1004 ... 31,848 ... 31,768 34,306 31,848 34,228 31,768

(a) General purpose recurrent grants mainly comprise the State’s share of GST funding.

Transfer Payments from the Commonwealth

Grant revenue and expenses exclude the following transfer payments from the Commonwealth that the State on-passes to third parties. They are not recorded as the State’s revenue and expenses as the State has no control over the amounts that it on-passes.

Transfer Payments from the Commonwealth Government General Total

Government Sector State Sector on-passed by NSW to Third Parties 2019-20 2018-19 2019-20 2018-19

$m $m $m $m

Transfer Receipts Transfer Receipts for Specific Purposes 5,500 4,845 5,500 4,845

5,500 4,845 5,500 4,845

Transfer Payments

Transfer Payments to Local Government 796 778 796 778 Transfer Payments to the Private and Not-For-Profit Sector 4,704 4,067 4,704 4,067

5,500 4,845 5,500 4,845

Note 2


Sale of Goods and Services

Sale of goods and rendering of other services are recognised in accordance with the requirements of AASB 15 from 1 July 2019. Revenue is recognised when the State satisfies a performance obligation by transferring the promised goods or services. Revenue is measured based on the consideration specified in the contract with a customer.

The transaction price for sales of goods and rendering of services takes into account estimates of variable consideration such as discounts and refunds. The State does not expect to have any significant contracts where the period between the transfer of promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the State does not adjust transaction prices for the time value of money for most revenues from contracts with customers.

Non-intellectual property licence fees arising from statutory requirements, excluding short-term and low value licences, are recognised as revenue under AASB 15 when the licence is issued. The State has elected to not apply the requirements of AASB 15 and accompanying application guidance to short-term licences and licences for which the transaction price is of low value. Revenue for these licences is recognised on a straight-line basis or another systemic basis over the licence period.

Refer to Note 8: Contract Balances for the disclosure of the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period, and the time periods when the State expects to recognise the unsatisfied portion as revenue.

Rental revenue arising from operating leases is recognised on a straight-line basis over the lease term under AASB 16 (2019: AASB 117).

Until 30 June 2019, revenue from the sale of goods was recognised under AASB 118 as revenue when the State transferred the significant risks and rewards of ownership of the goods, usually on delivery of the goods. Revenue from rendering of services was recognised under AASB 118 when the service was provided or by reference to the stage of completion.

General TotalGovernment Sector State Sector

2019-20 2018-19 Restated(a)

2019-20 2018-19 Restated(a)

$m $m $m $m

Sale of Goods and Services Comprise Revenue from:

Revenue from Contracts with Customers Sale of Goods and Rendering of Other Services(a)(b)(c)(d) 7,463 8,525 12,036 13,087 Licence Fees(a) 655 623 655 623 Rental Income Rentals from Public Housing and Non-Investment Properties(a)(e) 375 401 1,224 1,298 Rentals from Investment Properties 6 3 63 59 Other(c) 215 193 177 159

8,713 9,745 14,155 15,225

(e) Includes revenues from the provision of public housing:Market Rent and Other Tenant Charges 85 83 1,983 2,104

Less: Rental Subsidies to Tenants (29) (28) (1,185) (1,234)

56 55 799 870

(a) Refer to Note 32: Restatement / Corrections to Prior Years for details of restatements to the prior period.(b) Sale of goods of $362 million for the General Government Sector and $3,663 million for the Total State Sector were separately presented

from rendering of other services of $8,370 million for the General Government Sector and $9,944 million for the Total State Sector in the2018-19 TSSA.

(c) Sale of goods and services (other) includes premiums and contributions charged for providing insurance coverage services. $193 million forthe General Government Sector and $159 million for the Total State Sector of these revenues have been reclassified from sale of goodsand rendering of other services to other for 2018-19.

(d) In 2019-20, there was $1,428 million revenue (2018-19: $1,733 million) in the General Government Sector related to RailCorp (TAHE)recognised in sale of goods and rendering of other services.

Note 2


The following table provides information about the nature and timing of the satisfaction of performance obligations, significant payment terms and revenue recognition approaches for the State’s key revenues generated from the sale of goods and rendering of other services.

Type of Service Nature of Timing of Satisfaction of Performance Obligation, Including Significant Payment Terms

Revenue Recognition Policies

Electricity Distribution Services

The State provides electricity distribution, meter reading, and public lighting services. Customers simultaneously receive and consume distribution services as the State provides the service. Distribution services are billed to retailers based on energy consumption and tariff rates determined by the regulator. Invoices are issued monthly and are usually payable within 15-30 days.

Revenue is recognised over time as electricity distribution services are provided. Unbilled services are accrued based on the historical consumption of customers and prices per customer class.

Health Services The State recognises revenue from health patient and non-patient services with performance obligations being fulfilled at health service completion. Customers of health services are either billed at the time of service delivery or in accordance with contractual agreements. The payments for these services are typically due when invoiced.

Revenue for patient services is recognised on the date on which the services are provided to the patient. Revenue from non-patient services are recognised when the service is provided by reference to the type and stage of services provided to date.

Transport Passenger Services

The State recognises revenue from passenger services including train, bus and ferries trips. These revenues include proceeds from OPAL cards and ticket sales. Passenger services revenue is measured at the transaction price which is the price per passenger trip and includes any discounts provided to customers. Payments from customers are received either in advance or at the time of service provision.

Revenue is recognised when passenger services are provided to the customer.

Water and Water Related Services

The State recognises revenue from water retail, wastewater and trade waste services consisting primarily of volumetric and fixed availability charges. Customers simultaneously consume those services when provided by the State. Water services are billed to customers based on water consumption and prices determined by the regulator or customer agreement. Invoices are issued monthly or quarterly and are usually payable within 30 days.

Revenue from volumetric charges is recognised over time with the transfer and consumption of water and water related services. The State recognises an estimate for the accrued revenue earned from unbilled consumption when meters have not been read as at the reporting date. Revenue from fixed service availability charges received in advance is recognised evenly over time as customers receive service connections.

Services - Other The State recognises revenue from other services rendered including education, road tolls and transportation access charges, court and tribunal administration services, wharfage and pilotage services, event entry and management, and auxiliary administration support.

Revenue is measured at the transaction price agreed under the contract. Payments are due either at service provision date, within agreed billing terms, or on key contract milestone dates.

Revenues from other services are recognised when the service is provided by reference to the type and stage of services provided to date.

Sale of Goods The State sells goods including forestry products, vehicle plates, pharmaceutical supplies and prosthesis. The State typically satisfies its performance obligations when customers obtain control of the goods. Payments are typically due when invoiced or within agreed billing terms.

Revenue is recognised when the customer obtains control of the goods, typically when the goods are delivered to the customer.

Note 2


Interest

Interest revenue is recognised under AASB 9 by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For financial assets that become credit impaired, the effective interest rate is applied to the amortised cost of the financial asset (i.e. after deducting the loss allowance for expected credit losses).

Gains and losses on the revaluation of investments do not form part of ‘revenue from transactions’ but are reported as part of ‘other economic flows – included in the operating result’ in the Consolidated Statement of Comprehensive Income.

Refer to Note 26: Financial Instruments for further information on interest income classified by financial instrument measurement categories.


Interest Revenue comprises: Interest from TCorpIM Cash Funds 4 13 ... ... Interest from Deposits with TCorp 5 42 ... ... Interest from Other Financial Assets(a)(b) 355 437 610 801

364 491 610 801

(a) Includes interest from finance lease receivables of $79 million (2018-19: $66 million) for the General Government Sector and $97 million (2018-19: $85 million) for the Total State Sector.

(b) Interest from deposits of $278 million for the General Government Sector and $581 million for the Total State Sector presented separately in the 2018-19 TSSA have been reclassified to interest from other financial assets for 2018-19.

Dividend and Income Tax Equivalents from Other Sectors

The General Government Sector receives dividends and tax equivalent payments (pursuant to National Competition Policy, the National Tax Equivalent Regime and the Tax Equivalent Regime) from some of the State’s PNFC and PFC agencies. On consolidation, dividend and income tax equivalent entries are eliminated for the Total State Sector.

Dividend income is recognised under AASB 9 as ‘revenue from transactions’ in the period when the General Government Sector’s right to receive the payment has been established. Dividends paid out of asset sale proceeds are treated as ‘other economic flows – included in the operating result’.

Income tax equivalents (represented by the current tax payable/receivable by/from the PNFC and PFC sector) are recognised under AASB 1058 as ‘revenue from transactions’ when the underlying taxable event that results in a right to receive income has occurred, unless it cannot be measured reliably until after the financial statements are authorised for issue.

General Total Government Sector State Sector 2019-20 2018-19 2019-20 2018-19

$m $m $m $m

Dividend and Income Tax Equivalents from Other Sectors: Dividends from the PNFC Sector 1,047 1,321 ... ... Dividends from the PFC Sector 76 266 ... ... Income Tax Equivalents from the PNFC Sector 210 309 ... ... Income Tax Equivalents from the PFC Sector 22 37 ... ...

1,354 1,932 ... ...

Note 2


Other Dividends and Distributions

Distributions from managed funds are mainly from the State’s investment in TCorpIM Funds. Other dividends include dividends received from investments in entities other than the PNFC and PFC sectors. Dividend income is recognised under AASB 9 as ‘revenue from transactions’ in the period when the State’s right to receive the payment have been established.

General Total

Government Sector State Sector 2019-20 2018-19 2019-20 2018-19 $m $m $m $m

Other Dividends and Distributions: Distributions from Managed Funds 2,339 1,715 2,554 1,806 Dividends from Associates 87 219 87 219 2,426 1,934 2,641 2,025

Fines, Regulatory Fees and Other Revenues

Fines, regulatory fees and other revenues are recognised throughout the 2019-20 financial year as follows:

Industry and developer contributions are recognised as revenue under AASB 15 (2019: AASB 118) at a point in time, being the time that the State takes control of the contribution / asset or when the customer is connected to a network.

Royalties are recognised under AASB 1058 (2019: AASB 1004) when the underlying event that results in a right to receive income has occurred, unless it cannot be measured reliably until after the financial statements are authorised for issue.

Fines issued by the courts are recognised as income under AASB 1058 (2019: AASB 1004) when the fine is issued. Traffic infringement fines are recognised when the cash is received. Revenue from enforcement orders is regarded as being reliably measured when the order is issued.

Donations and other volunteer contributions without SSPOs are recognised as income under AASB 1058 (2019: AASB 1004) when the State obtains control over the financial or non-financial asset.

Emerging rights to receive privately financed infrastructure at the end of the service period are recognised as income and a non-current asset throughout the concession period in accordance with TPP 06-8. Refer to Note 16: Other Non-Financial Assets for further information on privately finance projects and service concession arrangements.

Other revenues (including fines and regulatory revenue) were primarily recognised throughout the 2018-19 financial year when earned if the monetary amounts could be determined reliably.


2019-20 2018-19

Restated(a) 2019-20 2018-19

Restated(a)

$m $m $m $m

Fines, Regulatory Fees and Other Revenues comprise(a): Revenue from Contracts with Customers

Developer Contributions(b) ... ... 351 408 Non-Contractual Income Arising from Statutory Requirements Royalties from Mining 1,684 2,093 1,684 2,093 Fines 596 653 596 653 Regulatory Fees 174 117 182 125 Other Incomes Donations and Other Contributions(b) 502 660 504 675 Emerging Right to Receive Privately Financed Infrastructure(a) 456 280 464 288 Other Revenue(a) 850 876 948 992

4,262 4,679 4,729 5,234

(a) Refer to Note 32: Restatement / Corrections to Prior Years for details of restatements to prior period. (b) Developer contributions and donations and other contributions were previously presented together as developer, industry and other

contributions in 2018-19.

Note 2


Disaggregation of Revenue from Contracts with Customers

Revenue from contracts with customers is disaggregated by NSW Government function (policy area) in the following tables.


2019-20 Grants and Subsidies

with Sufficiently

Specific Performance Obligations

Sale of Goods

and Rendering of Other Services

Licence Fees

Developer Contributions Total

$m $m $m $m $m

Disaggregation of Revenue from Contracts with Customers by Function (Policy Area)

General Public Services 1 335 49 ... 384

Defence ... ... ... ... ...

Public Order and Safety 81 403 15 ... 499

Economic Affairs ... 122 ... ... 122

Environment Protection 5 113 ... ... 118

Housing and Community Amenities 310 486 0 ... 796

Health 6,758 2,422 9 ... 9,188

Recreation, Culture and Religion 1 114 0 ... 115

Education 13 708 ... ... 721

Social Protection ... 17 ... ... 17

Transport 76 2,743 582 ... 3,401

Total 7,244 7,463 655 ... 15,361

Total State Sector

2019-20 Grants and Subsidies

with Sufficiently

Specific Performance Obligations

Sale of Goods

and Rendering of Other Services

Licence Fees

Developer Contributions Total

$m $m $m $m $m

Disaggregation of Revenue from Contracts with Customers by Function (Policy Area)

General Public Services 1 505 49 ... 554

Defence ... ... ... ... ...

Public Order and Safety 81 396 15 ... 492

Economic Affairs ... 2,369 ... 104 2,472

Environment Protection 5 115 ... ... 120

Housing and Community Amenities 253 3,116 0 248 3,618

Health 6,757 2,422 9 ... 9,187

Recreation, Culture and Religion 1 496 0 ... 496

Education 13 707 ... ... 721

Social Protection ... 20 ... ... 20

Transport 76 1,890 582 ... 2,549

Total 7,186 12,036 655 351 20,229

Note 2


Transition Impacts of Adopting AASB 15 Revenue from Contracts with Customers and AASB 1058 Income of Not-For-Profit Entities

The effects of adopting AASB 15 and AASB 1058 has resulted in an increase to accumulated funds as at 1 July 2019 is set out below:


1 July 2019

AASB 15 AASB 1058 Total

$m $m $m

NET WORTH

Accumulated Funds 347 758 1,104TOTAL NET WORTH 347 758 1,104

Total State Sector

1 July 2019

AASB 15 AASB 1058 Total

$m $m $m

NET WORTH

Accumulated Funds 343 758 1,100TOTAL NET WORTH 343 758 1,100

Note 2


The effect of adopting AASB 15 and AASB 1058 on the Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position for the year ended 30 June 2020 is set out below:


30 June 2020

As Reported Adjustments

Amounts without

AASB 15 and AASB

1058 AASB 15 AASB 1058 $m $m $m $m

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Revenue from Transactions

Taxation 29,941 ... (274) 29,667Grants and Subsidies 34,306 24 (900) 33,430Sales of Goods and Services 8,713 135 ... 8,848Fines, Regulatory Fees and Other 4,262 (0) 42 4,303Others 4,145 ... ... 4,145

Total Revenue from Transactions 81,367 159 (1,132) 80,393


Other Operating Expenses 23,156 126 ... 23,283Others 65,127 ... ... 65,127

Total Expenses from Transactions 88,283 126 ... 88,409

NET RESULT FROM TRANSACTIONS - NET OPERATING BALANCE (6,916) 33 (1,132) (8,016)

Net Other Economic Flows - Included in the Operating Result (3,013) (0) ... (3,013)

OPERATING RESULT (9,929) 33 (1,132) (11,028)

Net Other Economic Flows - Other Comprehensive Income (454) ... ... (454)

COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS (10,382) 33 (1,132) (11,482)

KEY FISCAL AGGREGATES COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS (10,382) 33 (1,132) (11,482)

Less: Net Other Economic Flows 3,466 ... ... 3,466

NET OPERATING BALANCE (6,916) 33 (1,132) (8,016)

Less: Net Acquisition of Non-Financial Assets 15,145 ... ... 15,145

EQUALS: NET LENDING/(BORROWING) (22,061) 33 (1,132) (23,160)

Note 2


30 June 2020


Amounts without

AASB 15 and AASB

1058 AASB 15 AASB 1058 $m $m $m $m

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS Financial Assets

Receivables 11,281 (7) (1,989) 9,286Others 164,045 ... ... 164,045

Total Financial Assets 175,326 (7) (1,989) 173,330

Non-Financial Assets Contract Assets 24 (24) ... ...Others 250,301 ... ... 250,301

Total Non-Financial Assets 250,325 (24) ... 250,301

TOTAL ASSETS 425,651 (31) (1,989) 423,631

LIABILITIES

Contract Liabilities 1,156 (1,156) ... ...Other Liabilities 5,015 1,439 (98) 6,356Others 180,793 ... ... 180,793

TOTAL LIABILITIES 186,964 283 (98) 187,148

NET ASSETS 238,688 (314) (1,891) 236,483

NET WORTH

Accumulated Funds 67,479 (314) (1,891) 65,274Reserves 171,209 ... ... 171,209

TOTAL NET WORTH 238,688 (314) (1,891) 236,483

OTHER FISCAL AGGREGATES

Net Debt 19,261 ... ... 19,261

Net Financial Liabilities 111,887 290 1,891 114,067

Note 2


Total State Sector

30 June 2020


Amounts without

AASB 15 and AASB

1058 AASB 15 AASB 1058 $m $m $m $m

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Revenue from Transactions

Taxation 29,939 ... (276) 29,663Grants and Subsidies 34,228 24 (900) 33,351Sales of Goods and Services 14,155 135 ... 14,290Fines, Regulatory Fees and Other 4,729 (0) 42 4,771Others 3,251 ... ... 3,251

Total Revenue from Transactions 86,302 159 (1,134) 85,326


Other Operating Expenses 26,961 126 ... 27,088Others 69,050 ... ... 69,050

Total Expenses from Transactions 96,011 126 ... 96,137

NET RESULT FROM TRANSACTIONS - NET OPERATING BALANCE (9,709) 33 (1,134) (10,811)

Other Economic Flows - Included in the Operating Result (5,402) (0) ... (5,402)

OPERATING RESULT (15,111) 33 (1,134) (16,213)

Other Economic Flows - Other Comprehensive Income 4,729 ... ... 4,729

COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS (10,382) 33 (1,134) (11,484)

KEY FISCAL AGGREGATES COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS (10,382) 33 (1,134) (11,484)

Less: Net Other Economic Flows 673 ... ... 673

NET OPERATING BALANCE (9,709) 33 (1,134) (10,811)

Less: Net Acquisition of Non-Financial Assets 16,396 ... ... 16,396

EQUALS: NET LENDING/(BORROWING) (26,105) 33 (1,134) (27,207)

Note 2


30 June 2020

As ReportedAdjustments

Amounts without

AASB 15 and AASB

1058 AASB 15 AASB 1058 $m $m $m $mCONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS

Financial Assets Receivables 11,146 (9) (1,991) 9,146Others 92,794 ... ... 92,794

Total Financial Assets 103,940 (9) (1,991) 101,940

Non-Financial Assets Contract Assets 24 (24) ... ...Others 390,616 ... ... 390,616

Total Non-Financial Assets 390,640 (24) ... 390,616

TOTAL ASSETS 494,580 (34) (1,991) 492,555

LIABILITIES

Contract Liabilities 1,259 (1,259) ... ...Other Liabilities 15,307 1,535 (98) 16,745Others 239,326 ... ... 239,326

TOTAL LIABILITIES 255,892 276 (98) 256,071

NET ASSETS 238,688 (310) (1,893) 236,484

NET WORTH

Accumulated Funds 80,048 (310) (1,893) 77,845Reserves 158,639 ... ... 158,639

TOTAL NET WORTH 238,688 (310) (1,893) 236,484


Net Debt 55,437 ... ... 55,437

Net Financial Liabilities 151,953 286 1,893 154,131

Note 2


The nature of the above adjustments is described below.

AASB 15


Under AASB 1004, income from grants and subsidies was recognised when the State obtained control over the contribution. The State deemed to have assumed control when the grant was received or receivable. Under AASB 15, revenue from grants with SSPOs is recognised when the State satisfies a performance obligation by transferring the promised goods or services that the State has promised to transfer. Under AASB 15, the State predominately satisfies its performance obligations over time as services are provided to the NSW public on behalf of granting bodies.

Therefore, for grants and subsidies with SSPOs revenue is deferred under AASB 15 compared to AASB 1004. The impact of these changes on items other than income is an increase in deferred revenue, which is included in a new balance named contract liabilities in Note 8: Contract Balances.


Under AASB 118, revenue from the sale of goods and services was recognised based on when risks and rewards were transferred to the customer. AASB 15 establishes a five-step model to account for revenue arising from contracts with customers and requires revenue to be recognised when the control over goods or services is passed to the customer. The application of requirements in AASB 15 did not result in a significant change to the recognition or measurement of revenue from the sale of goods and services.

Therefore, for sale of goods and services revenue recognition is largely aligned between AASB 15 and AASB 118. Revenue deferred from the sale of goods and services is however included in the new balance contract liabilities under AASB 15 in Note 8: Contract Balances which were previously presented as part of other liabilities under AASB 118 as per Note 25: Other Liabilities.

Licence Fees

Under AASB 118, revenue from non-intellectual property (non-IP) licences, including non-contractual licences, was deferred and recognised in accordance with the relevant agreement. For most arrangements, revenue recognition was initially deferred with revenue subsequently recognised over the licence period. Under AASB 15, revenue recognised from non-IP licences is recognised at the point of time when the license is issued.

Therefore, for non-IP licences revenue is recognised sooner under AASB 15 than under AASB 118. The impact of these changes on items other than revenue is a decrease in deferred revenue.

The State has elected to not apply the requirements of AASB 15 and accompanying application guidance to short-term licences and licences for which the transaction price is of low value. Revenue for these licences continues to be deferred and subsequently recognised on a straight-line basis or on another systemic basis over the licence period.

Other Comprehensive Income and Consolidated Statement of Cash Flows

The adoption of AASB 15 did not have any impacts on other comprehensive income and the Consolidated Statement of Cash Flows of the State for the financial year ended 30 June 2020.

AASB 1058

Taxation

Under AASB 1004, income from taxpayer-assessed taxation revenues was recognised when the funds were received by the State as this was when the income could be reliably measured. From 1 July 2019, AASB 9 requires statutory receivables, including taxation receivables, to be recognised when the underlying event that results in a right to receive income has occurred, unless it cannot be measured reliably until after the financial statements are authorised for issue. Taxation income is correspondingly recognised, as reference by AASB 1058, when the taxable event occurs.

Therefore, taxpayer-assessed taxation income is now recognised earlier under AASB 9 / AASB 1058 when the taxable event occurs compared to AASB 1004 where income was recognised on control of funds. The impact of these changes on items other than income is an increase in receivables from taxation, which is presented as part of statutory receivables in Note 7: Receivables.

Note 2



Under AASB 1004, income from grants and subsidies was recognised when the State obtained control over the contribution. The State deemed to have assumed control when the grant was received or receivable. Under AASB 1058, income from grants to acquire/construct a recognisable non-financial asset to be controlled by the State is recognised when the State satisfies the obligation under the transfer. Under AASB 1058, income is primarily recognised over time as the relevant non-financial assets are being constructed.

Therefore, for transfers to acquire/construct a recognisable non-financial asset to be controlled by the State income is accrued under AASB 1058 compared to AASB 1004. The impact of these changes on items other than income is an increase in deferred income, which is presented as part of Note 25: Other Liabilities as liabilities arising from transfers to acquire or construct non-financial assets to be controlled by the State, and an increase in receivables in Note 7: Receivables for grant funding received in arrears of asset acquisition / construction.

Other Comprehensive Income and Consolidated Statement of Cash Flows

The adoption of AASB 1058 did not have any impacts on other comprehensive income and the Consolidated Statement of Cash Flows of the State for the financial year ended 30 June 2020.

Note 3


Note 3: Expenses

Employee Expenses (excluding Superannuation)

General Total


Employee Expenses Comprise: Salaries and Wages (including Recreation Leave) 32,572 30,478 34,823 32,569 Long Service Leave 1,195 1,202 1,288 1,297 Workers' Compensation 1,251 908 1,282 935 Other 536 570 719 743 35,555 33,158 38,112 35,544

The recognition and measurement policy for employee expenses is detailed in Note 22: Employee Provisions. Some employee-related expenses are capitalised as part of the construction costs of certain non-current physical assets. Payroll tax paid by NSW General Government Sector agencies is eliminated in the General Government Sector financial statements, along with the PNFC and PFC amounts, in the Total State Sector financial statements.

Superannuation Expense

General Total


Superannuation Interest Costs Comprise: Net Interest(a) 882 1,412 927 1,466

882 1,412 927 1,466

Other Superannuation Expenses Comprise:

Defined Benefit Plans, excluding Actuarial Gains/Losses(a) 400 411 436 445 Defined Contribution Plans 2,887 2,641 3,081 2,805

3,288 3,052 3,517 3,250

(a) Refer to Note 23: Superannuation Provisions for a dissection of defined benefit superannuation expense by component.

Note 3


Depreciation and Amortisation Expense


2019-20 2018-19 Restated(a)

2019-20 2018-19 Restated(a)

$m $m $m $m

Depreciation and Amortisation Expense Comprise:

Depreciation on(b)(c)(d) Buildings 1,742 1,794 2,683 2,732 Plant and Equipment 901 882 1,251 1,260 Infrastructure Systems 1,893 1,868 3,450 3,212 Right-of-Use Assets(e) 773 ... 980 ...Amortisation of(b)(c)(d) Capital Prepayments - Right to Receive 23 20 23 17 Intangibles 616 608 771 743

5,948 5,171 9,159 7,964

(a) Refer to Note 32: Restatement/Correction to Prior Year Comparatives, for details of correction to prior period.(b) Refer to Note 14: Property, Plant and Equipment and Note 28: Leases for the basis of useful lives applied to calculate depreciation of PP&E

and Right-of-Use Assets. Refer to Note 15: Intangibles for the basis of useful lives applied to calculate amortisation of Intangibles.(c) $138 million for the General Government Sector and $153 million for the Total State Sector relating to depreciation on finance lease assets

was reclassified from Amortisation Expense to Depreciation Expense for 2018-19.(d) Refer to Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period.(e) Right-of-use assets depreciation expense is presented by class of underlying asset in Note 28: Leases, and amounts in Note 3 and Note 28

are different due to capitalisation of depreciation.

Interest Expense

Interest costs, including borrowing costs under AASB 123 Borrowing Costs, are recognised as expenses in the period in which they occur.


2019-20 2018-19 2019-20 2018-19$m $m $m $m

Interest Expenses Comprise:

Interest on Borrowings 1,622 1,331 2,386 2,299 Interest on Lease Liabilities(a)(b) 308 213 594 478 Unwinding of Discounts on Provision Liabilities 154 267 216 360

2,084 1,812 3,197 3,137

(a) The State continues to apply the principles of AASB 117 Finance Lease Liabilities and associated Interest Expense for several PFPsaccounted for in accordance with TPP06-8. Interest on Lease Liabilities for 2019-20 includes Interest on Finance Lease Liabilitiesrecognised for PFP arrangements of $130 million for the General Government Sector and $214 million for the Total State Sector. Refer toNote 16: Other Non-Financial Assets for recognition and measurement policies applied for PFPs accounted for under TPP06-8.

(b) In 2018-19, this expenditure item relates to Interest on Finance Lease Liabilities recognised under AASB 117.

Refer to Note 26: Financial Instruments for information on interest expense by financial instrument measurement categories.

Note 3


Other Operating Expense


2019-20 2018-19

Restated(b) 2019-20 2018-19

Restated(b)

$m $m $m $m

Other Operating Expenses Comprise: Lease Expenses(a) 332 841 408 1,059 Contractor Fees(b) 1,244 1,354 2,220 2,354 Consultancy Fees(b) 121 151 155 198 Inventories Used Up 10 14 149 239 Audit Fees(c) ... ... ... ... Insurance Claims 2,749 754 3,597 1,579 Supplies, Services and Other(b)(d) 16,625 16,015 16,876 15,997 External Maintenance (excluding Employee Costs associated with Maintenance) 2,075 2,016 3,557 3,379

23,156 21,146 26,961 24,805

(a) For 2019-20, lease expenses include lease payments not included in the measurement of lease liabilities recognised under AASB 16. Expenses include payments for short-term leases, low-value leases and variable lease payments that do not depend on an index or rate. In 2018-19, this expenditure item relates to operating lease payments recognised as expense under AASB 117.

(b) In 2018-19, $155 million ‘Contractor Fees’ were reclassified from ‘Consultancy Fees” in the General Government Sector and the Total State Sector, and $131 million ‘Contractor Fees’ were reclassified from ‘Supplies, Services and Other’ in the Total State Sector.

(c) Fees to the Audit Office of New South Wales have not been recognised as expenses because they have been eliminated in the consolidation of the NSW Total State and General Government sectors. The fees eliminated are for financial audits: $26 million to the General Government Sector (2018-19: $22 million), and $32 million to the Total State Sector (2018-19: $28 million). In addition, $14 million for General Government and Total State Sectors performance and other audits (2018-19: $17 million) have been eliminated.

(d) In 2019-20, there was $1,428 million expenses (2018-19: $1,733 million) in the General Government Sector related to RailCorp (TAHE) in ‘Supplies, Services and Other’.


Grants and subsidy expenses are generally comprised of cash contributions to local government authorities and non-government organisations. They are expensed when the State transfers control of the assets. For the General Government Sector, they also include grants and subsidies paid to PNFCs and PFCs, which are eliminated in the Total State Sector.

General Total


Grants, Subsidies and Transfers for Recurrent Purposes 16,369 13,595 13,299 10,921 Capital Purposes 1,001 1,105 839 741 17,369 14,700 14,137 11,662

Recurrent and Capital Grants and Subsidies are Provided for(a)(b) General Public Services 797 1,362 796 1,028 Public Order and Safety 172 162 172 162 Economic Affairs 1,799 673 1,718 579 Environmental Protection 293 147 278 142 Housing and Community Amenities 355 511 149 308 Health 1,433 1,344 1,433 1,344 Recreation, Culture and Religion 458 351 387 276 Education 2,078 2,032 1,984 1,942 Social Protection 6,610 5,286 6,127 5,076 Transport 3,372 2,832 1,094 804

17,369 14,700 14,137 11,662

(a) Refer to Note 35: Disaggregated Financial Statements for information on total expenses (excluding losses) by function. (b) For 2018-19, functions were not restated to reflect an impact of the revised outcome budgeting programs by agencies.

Note 4


Note 4: Other Economic Flows Included in the Operating Result

Other Economic Flows mainly comprise of gains and losses on re-measurement of assets and liabilities. These gains or losses are ‘other economic flows’, which are included in the ‘operating result’ or ‘other comprehensive income’.

Refer to Note 26: Financial Instruments for information on fair value adjustments to financial instruments by financial instrument measurement categories.

General Total


Gain/(Loss) from Liabilities Changes in Discount Rates for Long Service Leave Liabilities(a) (468) (1,499) (475) (1,532) Changes in Discount and Inflation Rates for Insurance Liabilities(b) 267 (1,001) (151) (1,685)

(201) (2,500) (626) (3,218)

Other Net Gains/(Losses) in the Operating Result Net Gains / (Losses) on Financial Assets at Fair Value through Profit and Loss(c) ... 13,201 ... 13,225 Disposal of Property, Plant and Equipment (140) (304) (145) (405) Disposal of Intangible Assets (0) (1) (10) (3) Fair Value Adjustments to: Investment Property ... ... 37 29 Impairment Losses on Right-of-Use Assets(d)(e) (459) ... (478) ... Net Gain / (Losses) on Forestry Stock and Other Biological Assets(e)(f) ... ... (346) 177 Financial Instruments(g) (2,082) 1,060 (3,574) (1,349) Assets Recognised for First Time 127 131 129 133 Infrastructure and Other Assets Written Off (139) (237) (345) (326) Other(e) 141 (150) 129 (150) (2,553) 13,700 (4,603) 11,332

Share of Earnings from Equity Investments (excluding Dividends) 46 (1) 45 (1)

Dividends from Asset Sales Proceeds 31 (0) ... ...

Deferred Income Tax from Other Sectors (123) (97) ... ...

Other Economic Flows Impairment Losses on Financial Assets (212) (69) (218) (74) Other ... 84 ... 84

(212) 14 (218) 10

Discontinuing Operations ... (0) ... (0)

Other Economic Flows - included in Operating Result (3,013) 11,117 (5,402) 8,123

(a) The loss on revaluation of long service leave liabilities was lower in the 2019-20 financial year due to smaller reductions in the Commonwealth bond rate compared to last year. The Commonwealth Government 10-year bond rate decreased by 0.45 per cent from 1.32 per cent at 1 July 2019 to 0.87 per cent at 30 June 2020, compared to 2.65 per cent at 1 July 2018 to 1.32 per cent at 30 June 2019.

(b) Relates to changes in the discount rate used on outstanding claims liabilities for the NSW Self Insurance Corporation, and Lifetime Care and Support Schemes.

(c) The comparative 2018-19 financial year includes $13.2 billion in gains in relation to the WestConnex Group transaction. Refer to Note 5 – Discounted Operations for further information.

(d) The impairment loss on right-of-use assets is due to COVID-19 restrictions decreasing market rent and the recoverable amount of these assets. There are no prior year comparatives as the State has adopted AASB 16 at 1 July 2019 using the partial retrospective transition approach.

(e) Impairment of right-of-use assets and revaluation losses on forestry stock and other biological assets resulting from COVID-19 and natural disaster events have been separately disclosed in 2019-20. Comparative amounts for the 2018-19 financial year have also been reclassified.

(f) Forestry stock was revalued downwards in the 2019-20 financial year due primarily to severe bushfire damage. (g) The $3,142 million General Government Sector decrease in fair value adjustments to financial instruments is mainly driven by the Crown

Finance Entity’s market valuation losses on TCorpIM Fund investments. The reduction of $2,225 million for the Total State Sector in the 2019-20 financial year is due primarily to the reduction in market yields resulting in unrealised valuation losses on NSW TCorp bonds and borrowings liabilities.

Note 5


Note 5: Discontinued Operations

In 2019-20, no operations were classified as discontinuing.

During the 2018-19 year, the State of NSW disposed of its controlling interest in the WestConnex Group. These operations were classified as discontinuing.

The WestConnex Group transaction was finalised as follows:

Operation Purchaser Sale

Consideration Transaction Stamp Duty

$m $m

WestConnex Group Sydney Transport Partners (51 per cent) 8,731 555

WestConnex Group

WestConnex is the largest road infrastructure project in Australia, linking Western and South-Western Sydney with the City, airport and port in a 33-kilometre continuous motorway. The WestConnex Group is constructing and operating the road network under concession agreements expiring in 2060.

During the comparative 2018-19 financial year a sale and purchase agreement was executed between Sydney Transport Partners (STP) and the State of NSW for the sale of 51 per cent of the State’s interests in the WestConnex Group. The sale transaction was completed on the 27 September 2018. The State retains a 49 per cent interest in the WestConnex Group via a controlled entity, Roads Retained Interest Pty Ltd, a corporation constituted under the Corporations Act 2001.

The Government received cash of $8,731 million for the WestConnex Group transaction from Sydney Transport Partners. Additionally, stamp duty of $555 million was paid to the Office of State Revenue on behalf of the purchaser, resulting in total cash proceeds on the sale of $9,286 million.

As the activities of the WestConnex Group ceased, it was treated as a discontinued operation in the comparative 2018-19 financial year. The results of the WestConnex Group’s discontinued operations for the 2018-19 financial year are presented below.

General Total

Government Sector State Sector 2019-20 2018-19 2019-20 2018-19

Gain/(Loss) from WestConnex Group $m $m $m $m

Cash Proceeds from Sale ... 8,731 ... 8,731Fair Value of the State's retained interest held in Roads Retained Interest Pty Ltd ... 7,549 ... 7,549

Less: Net investment attributed to sold operations ... (3,079) ... (3,055)

Gain/(Loss) Recognised in the Comprehensive Result ... 13,201 ... 13,225

Note 5 and Note 6



Net Operating Result of the Discontinued Operation Revenues from Discontinued Operation Sale of Goods and Services ... ... ... 48Other Income ... ... ... 4 ... ... ... 52

Expenses from Discontinued Operation Expenses ... ... ... 44 ... ... ... 44

Net Operating Balance from Discontinued Operation ... ... ... 8

Other Economic Flows of the Discontinued Operation ... ... ... ...

Cash Flows of WestConnex Group Discontinued Operation Operating Activities ... ... ... 7Investing Activities ... ... ... (1,239)Financing Activities ... ... ... ...

Note 6: Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents comprise of cash at bank and in hand, short term deposits and other investments with an original maturity of three months or less (which are subject to an insignificant risk change in value), and deposits in NSW Treasury Corporation’s TCorpIM Funds. Cash and cash equivalents are presented net of outstanding bank overdrafts for the purposes of the Statement of Cash Flows.

General Total


Cash administered by NSW Treasury Corporation TCorpIM Funds 191 279 ... ...Cash and Deposits held at other Financial Institutions 5,944 1,690 10,717 8,979

6,134 1,969 10,717 8,979

The State’s interest in the TCorpIM Funds is brought to account as cash equivalents because deposits and withdrawals can be made on a daily basis and are not subject to significant risk of a change in value.

TCorpIM Fund investments are available to all NSW public authorities, including universities and local government authorities. Each TCorpIM Funds investment has been established as an individual unit trust and each trust has its own investment objective and strategy.

Total State Sector cash and deposits held at banks and other financial institutions include consolidated TCorpIM Fund Trust holdings in cash and short-term deposits amounting to $2,103 million (2019: $2,817 million).

Note 6


Reconciliation of Operating Result to Net Cash Flows from Operating Activities


2019-20 2018-19

Restated(a) 2019-20 2018-19

Restated(a)

$m $m $m $m

Operating result for the year (9,929) 12,322 (15,111) 6,395Adjust for: Non-cash Items Added Back: Depreciation and Amortisation(a) 5,948 5,171 9,159 7,964 Donations and Contributions 95 190 398 577 Capital Grant Expense 638 508 597 508 Right to Receive Privately Financed Infrastructure 456 280 464 288 Other Non Cash Operating Activities 212 288 328 65Other Economic Flows - included in the Operating Result(b) 3,013 (11,117) 5,402 (8,123)Net Change in Operating Assets and Liabilities (716) (315) (1,617) 842Net Cash Flows from Operating Activities (284) 7,328 (381) 8,517

(a) Refer to Note 32: Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period. (b) The movements of the Other Economic Flows in 2018-19 were mainly due to the $13.2 billion gain from the WestConnex Group transaction.

Note 6


Reconciliation of Closing Cash and Cash Equivalents to the Statement of Cash Flows

Cash assets in the Statement of Financial Position comprise of cash, deposits at call, and other investments. Deposits in TCorpIM Funds and TCorp deposits with a maturity of less than 90 days are reported as cash and deposits at call. Other investments readily convertible to a known cash amount, subject to an insignificant risk of changes in value, and with maturity of less than 90 days are reported as cash. Cash and cash equivalents recognised in the Statement of Financial Position are agreed at the end of the financial year to the Statement of Cash Flows, and are as follows:

General Total


Cash and Deposits 6,134 1,969 10,717 8,979

6,134 1,969 10,717 8,979

Restricted Cash Assets

Cash assets in the Consolidated Statement of Financial Position also comprise cash and term deposits held in Crown Special Deposit Accounts (SDA) for Restart NSW of $1,204 million (2018-19: $707 million) and can only be used in accordance with the legislation that established the Account. Sales proceeds from major asset transactions are deposited in the State’s dedicated infrastructure fund Restart NSW and/or New South Wales Generation Fund (NGF), to fund the delivery of major capital infrastructure projects across the State. Funds were withdrawn from the TCorpIM Fund investments and deposited into the Restart SDA bank account for anticipated infrastructure spend during the year 2020. The increase relates to a higher than expected cash balance remaining in the SDA due to project expenditure not being incurred within the expected profile. Term deposits disclosed in Note 9: Investments, Loans and Placements form part of the Crown Special Deposit Accounts.

Acquisition and Disposal of Entities

There were no acquisitions or disposals of entities throughout the current financial year ended 30 June 2020.

Note 5: Discontinued Operations details information on the proceeds from sale of the WestConnex Group received in the comparative financial year ended 30 June 2019.

Non-Cash Financing and Investing Activities

During 2019-20:

Assets acquired through leasing arrangements totalled $2,915 million for the General Government Sector and $2,990 million for the Total State Sector. In the comparative 2018-19 financial year, property, plant and equipment acquired through finance leases totalled $159 million for both the General Government Sector and Total State Sector. Further information on leasing arrangements, including the effects of initially applying AASB 16 for the current financial year, are disclosed in Note 28: Leases.

In the General Government Sector, a total of $456 million (2018-19: $280 million) was recognised for emerging interests in the private sector provided infrastructure. A total of $464 million (2018-19: $288 million) was recognised in the Total State Sector. It includes $181 million recognised for various road projects (2018-19: $263 million).

Other assets acquired free of cost in the Total State Sector amounted to $398 million (2018-19: $577 million). In the General Government Sector, these assets amounted to $95 million (2018-19: $190 million). They include sub-divider/developer contributions of water assets of $240 million (2018-19: $277 million) and electricity assets of $80 million in 2019-20 (2018-19: $104 million).

It is impracticable to report on the numerous other assets donated to NSW public sector agencies particularly dedicated for transport, health, education and cultural purposes. They are generally reported in individual agency financial statements.

Note 6


Reconciliation of Movements of Liabilities to Cash Flows Arising from Financing Activities

The tables below reconcile movements of financial liabilities to cash flows arising from financing activities.


30 June 2020

Deposits

Held

Other Fair Value

BorrowingsLease

Liabilities(a)

Other Borrowings

at Amortised Cost

Advances Received Total

Note 18 20 21 21 $m $m $m $m $m $m

Balance at 30 June 2019 67 ... 2,590 35,066 756 38,478

Amounts Restated on Adoption of AASB 16 ... ... 3,997 ... ... 3,997

Balance at 1 July 2019 67 ... 6,586 35,066 756 42,474

Net Financing Cash Flows 2 ... (803) 22,507 (76) 21,630

Non-Cash Items: Lease/Non Financial Asset Additions ... ... 2,740 1,937 ... 4,678

Other Movements (0) ... (86) (62) 16 (132)

Balance at 30 June 2020 69 ... 8,438 59,448 696 68,650

(a) The State continues to apply the principles of AASB 117 Finance Lease Liabilities for several PFPs accounted for in accordance with TPP06-8. Lease Liabilities for 2019-20 includes Finance Lease Liabilities recognised for PFP arrangements of $1,352 million for the General Government Sector. Refer to Note 16: Other Non-Financial Assets for recognition and measurement policies applied for PFPs accounted for under TPP06-8.

30 June 2019

Deposits

Held

Other Fair Value

Borrowings

Finance Lease

Liabilities

Other Borrowings

at Amortised Cost


Note 18 20 21 21 $m $m $m $m $m $m

Balance at 1 July 2018 130 3 2,984 29,457 797 33,370

Net Financing Cash Flows 19 ... (202) 5,150 (69) 4,899

Non-Cash Items: Lease/Non Financial Asset Additions ... ... 159 ... ... 159

Valuation Adjustments ... ... ... 147 ... 147

Other Movements (82) (3) (352) 312 28 (97)

Balance at 30 June 2019 67 ... 2,590 35,066 756 38,478

Note 6


Total State Sector

30 June 2020

Deposits

Held

Bonds and Other

Borrowings Issued by

TCorp

Other Fair Value

BorrowingsLease

Liabilities(a)

Other Borrowings

at Amortised Cost


Note 18 20 20 21 21 $m $m $m $m $m $m $m

Balance at 30 June 2019 293 71,777 ... 5,287 1,864 756 79,976

Amounts Restated on Adoption of AASB 16 ... ... ... 4,651 ... ... 4,651

Balance at 1 July 2019 293 71,777 ... 9,938 1,864 756 84,628

Net Financing Cash Flows (47) 22,888 ... (918) (174) (77) 21,672

Non-Cash Items: Lease/Non Financial Asset Additions ... ... ... 2,818 1,937 ... 4,756

Valuation Adjustments ... 2,117 ... ... ... 2,117

Other Movements (101) 187 ... (75) 34 18 63

Balance at 30 June 2020 144 96,970 ... 11,764 3,662 696 113,236

(a) The State continues to apply the principles of AASB 117 Finance Lease Liabilities for several PFPs accounted for in accordance with TPP06-8. Lease Liabilities for 2019-20 includes Finance Lease Liabilities recognised for PFP arrangements of $1,994 million for the Total State Sector. Refer to Note 16: Other Non-Financial Assets for recognition and measurement policies applied for PFPs accounted for under TPP06-8.

30 June 2019

Deposits

Held

Bonds and Other

Borrowings Issued by

TCorp

Other Fair Value

Borrowings

Finance Lease

Liabilities

Other Borrowings

at Amortised Cost


Note 18 20 20 21 21 $m $m $m $m $m $m $m

Balance at 1 July 2018 385 62,039 1,133 5,302 2,155 797 71,810

Net Financing Cash Flows (2) 6,716 ... (269) 1,758 (69) 8,134

Lease/Non Financial Asset Additions ... ... ... 159 ... ... 159

Non-Cash Items: Gain/Loss on Sale of PNFC/PFC Sector Entities ... ... (1,096) ... (2,149) ... (3,245)

Valuation Adjustments ... 3,128 ... ... ... ... 3,128

Other Movements (89) (106) (38) 94 100 28 (11)

Balance at 30 June 2019 293 71,777 ... 5,287 1,864 756 79,976

Note 7


Note 7: Receivables

Receivables are recognised initially at fair value plus any directly attributable transaction costs. Receivables that do not contain a significant financial component are measured at the transaction price. Receivables are subsequently measured at amortised cost using the effective interest method, less any impairment.

Statutory receivables, including taxation, fines and levy receivables, are not classified as financial instruments for financial reporting purposes.

Refer to Note 26: Financial Instruments for details regarding the credit risk of receivables.

General Total


Current 8,904 5,838 8,965 6,058Non-current 2,378 1,653 2,181 1,469

11,281 7,491 11,146 7,527

Receivables Comprise:

Contractual Receivables: Sale of Goods and Services(a) 1,449 1,527 1,869 1,810 Dividends from the PNFC and PFC Sectors 1,122 844 ... ... Asset Sales 1,095 679 1,096 680 Interest 10 15 54 39 Other 1,817 1,346 2,542 2,124Statutory Receivables: Taxation(b) 4,967 2,284 4,792 2,103 Dust Disease Insurance Levies Accrued(c) 805 615 805 615 Fines(d) 674 662 674 662 11,938 7,972 11,832 8,033

Less: Loss Allowance(e) (657) (481) (686) (506)

11,281 7,491 11,146 7,527

(a) Sale of goods and services comprise receivables from contracts with customers as per AASB 15. (b) Increases to taxation receivables have been driven by stimulus measures implemented due to COVID-19 including the option to defer

taxpayer-assessed taxation, that is payroll tax payments to October 2020 for the periods March to June. (c) Levies receivable under the Workers’ Compensation (Dust Diseases) Act 1942 reflect the full funding of total claim liabilities as estimated by

actuaries at the reporting date. This recognises the legislative power given to the State to impose levies to meet the cost of claim obligations under this Act.

(d) In 2019-20, ‘fines’ receivables have been separately disclosed. In the 2018-19 comparative, $662 million has been reclassified from ‘other’ receivables to ‘fines’ receivables to ensure consistent presentation of receivable balances across the reporting periods.

(e) The allowance for impairment in the Total State Sector mainly comprises doubtful debts related to the sales of goods and services of $147 million (2018-19: $157 million), the collection of fees and fines of $334 million (2018-19: $266 million) and payroll tax of $102 million (2018-19: $36 million).

Note 8


Note 8: Contract Balances

The following information represents contract assets and contract liabilities from contracts with customers accounted for under AASB 15 Revenue from Contract with Customers.

Contract Assets

Contract assets relate to the State’s right to consideration in exchange for goods transferred to customers/works completed,but right to payment is conditional on performance of other obligations. The balance of contract assets at 30 June 2020 primarily relates to revenue recognised from the sale of goods and services and grants and subsidies. Contract assets are transferred to receivables when the rights become unconditional. This occurs when the State has completed a contractual obligation and issues an invoice.

General Total Government Sector State Sector 2019-20 1 July 2019 2019-20 1 July 2019 $m $m $m $m

Current 24 10 24 10Non-Current ... ... ... ...

24 10 24 10

Contract Assets Recognised for:

Sales of Goods of Services Revenue 18 10 18 10Grants and Subsidies Revenue 4 0 4 0Other Revenues 2 ... 2 ...

24 10 24 10

Less: Loss Allowance ... ... ... ... 24 10 24 10

Contract assets increased throughout the reporting period by $14 million for the General Government Sector and the Total State Sector. The growth in contract assets was primarily due to changes in the time frame for rights to consideration to become unconditional.

Refer to Note 26: Financial Instruments for disclosures regarding contract asset impairment.

Contract Liabilities

Contract liabilities primarily relate to consideration received in advance from customers in respect of revenues recognised from the sale of goods and services and grants and subsidies with sufficiently specific performance obligations.

General Total Government Sector State Sector 2019-20 1 July 2019 2019-20 1 July 2019 $m $m $m $m

Current 893 516 958 586Non-Current 263 267 301 292

1,156 782 1,259 878

Contract Liabilities Relate to:

Sales of Goods of Services Revenue 766 411 812 447Grants and Subsidies Revenue 390 372 390 372Other ... ... 56 60

1,156 782 1,259 878

Note 8 and Note 9


Contract liabilities increased throughout the reporting period by $374 million for the General Government Sector and $381 million for the Total State Sector. The growth in contract liabilities was primarily due to changes in the time frame for performance obligations to be satisfied for sales of goods and services recognised within the Education and Transport cluster.

The following table provides information on contract liabilities from contracts with customers.

General

Government Sector

Total State Sector

2019-20 2019-20 $m $m

Revenue Recognised that was Included in the Contract Liability Balance (Adjusted for AASB 15) at the Beginning of the Year 488 540

Revenue Recognised from Performance Obligations Satisfied in Previous Periods 6 18Transaction Price Allocated to the Remaining Performance Obligations from Contracts with

Customers 846 919

The transaction price allocated to the remaining performance obligations relates primarily to sales of goods and services revenue. For the General Government Sector, 84% is expected to be recognised as revenue in the next financial year ending 30 June 2021 and 16% in subsequent financial years. For the Total State Sector, 82% is expected to be recognised as revenue in the next financial year ending 30 June 2021 and 18% in subsequent financial years.

No information is provided about remaining performance obligations at 30 June 2020 for contracts that have an original expected duration of one year or less. The disclosed amounts also do not include variable consideration which is constrained.

Note 9: Investments, Loans and Placements

Financial Assets at Fair Value

Investments, loans and placements measured at fair value comprise of debt investments, managed fund investments (including TCorpIM Funds) and derivative assets.

The State’s debt investments and managed fund investments are classified, at initial recognition as amortised cost, and subsequently measured at FVTPL.

Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at FVTPL, irrespective of the business model. Debt and managed funds investments are managed, and their performance is evaluated on a fair value basis and therefore the business model is neither to hold to collect contractual cash flows or sell the financial asset. Hence these investments are mandatorily required to be measured at FVTPL.

Derivative assets are classified as held for trading and are measured at FVTPL unless they are designated as effective hedging instruments.

TCorpIM Funds are restricted to NSW public authorities, including universities and local councils. Each TCorpIM Fund has been established as an individual unit trust and each trust has its own investment objective and strategy. As the majority unit holder in the TCorpIM Funds, the State has been assessed to control the Funds under AASB 10. Thus, the TCorpIM Funds’ assets and liabilities are consolidated into the Statement of Financial Position of the Total State Sector. The State has invested a major component of Restart NSW money and the established New South Wales Generation Fund (NGF) in TCorpIM Fund Trust investments.

Refer to Note 11: Equity Investments for the carrying amounts of equity securities at fair value. Further information regarding fair value measurement, credit risk, and market risk arising from financial assets at fair value are described in Note 26: Financial Instruments.

Note 9



Current(a) 1,788 1,897 42,564 40,617Non-current(a) 39,086 41,436 3,345 3,943

40,874 43,333 45,909 44,560

Financial Assets at Fair Value comprise:

Financial Assets Held for Trading

Derivative Assets 4 3 1,340 845 4 3 1,340 845

Designated and Effective Hedging Instruments

Derivative Assets 0 21 1 25 0 21 1 25

Financial Assets at FVTPL(b)

Interest Bearing Securities(c) 250 267 30,708 31,891 TCorpIM Funds 40,571 42,984 ... ... Managed Funds and Other Investments 48 56 13,860 11,798

40,870 43,308 44,568 43,689

Total Financial Assets at Fair Value 40,874 43,333 45,909 44,560

(a) The current and non-current classification is different in the General Government Sector and Total State Sector due to different investment objectives.

(b) The State’s financial assets at FVTPL are mandatorily measured at FVTPL under AASB 9. (c) Interest bearing securities are debt investments and include bonds, certificates of deposit, floating rate notes and other debt securities.

Other Financial Assets

Other financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturity, comprising predominately of term deposits and leases receivable under finance lease arrangements. Other financial assets are initially measured at fair value plus any transaction costs and are subsequently measured at amortised cost using the effective interest method.

Amounts due from lessees under finance leases are classified at amortised cost and recognised at the amount of the State’s net investment in the lease. Finance income is allocated to accounting periods so as to reflect a constant periodic rate of return on the State’s net investment outstanding in respect of the leases.

The majority of term deposits are held as part of Restart NSW for infrastructure investments. Since 2016-17, a substantial part of these funds were reinvested in TCorpIM Funds. Term deposits with a maturity of less than 3 months (including those for Restart NSW) are classified as Cash and Cash Equivalents (Note 6: Cash and Cash Equivalents).

Note 9 and Note 10


Further information regarding fair value measurement, credit risk, and market risk of other financial assets are described in Note 26: Financial Instruments.

General Total


Current 212 1,482 294 1,353Non-current 1,322 1,109 1,490 1,440 1,533 2,591 1,784 2,793

Financial Assets at Amortised Cost Comprise:

Term Deposits - Maturity Greater Than 3 Months 157 1,462 230 1,274 Leases Receivable(a) 1,285 1,058 1,456 1,441 Other 92 71 98 78

1,533 2,591 1,784 2,793

(a) Refer to Note 28: Leases for further details regarding lease receivables recognised under AASB 16 in the current reporting period and under AASB 117 in the comparative reporting period.

Note 10: Advances Paid

Advances paid are loans provided for government policy purposes rather than for liquidity management and are made with contractual interest rates intentionally set below the market interest rate that would otherwise apply.

Advances are initially measured at fair value (estimated as the present value of all future cash receipts discounted using Government bond rate) plus any transactions costs. The difference between the nominal value of the loan and its estimated fair value is recognised as the discount component, which is expensed immediately. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective interest method, less impairment.

Further information regarding credit risk and market risk of advances paid are described in Note 26: Financial Instruments.

General Total


Current 105 116 89 101Non-current 1,134 1,077 687 614

1,239 1,193 776 715

Advances Comprise:

Treasury Advances for Public Housing and Other Purposes 493 543 30 65 Loans for Rural Assistance 554 473 554 473 Loans for Road Transport Infrastructure 192 178 192 178

1,239 1,193 776 715

Note 11


Note 11: Equity Investments

Equity Investments in Other Public Sector Entities

In the General Government Sector financial statements, the interest in the PNFC and PFC sectors is accounted for as an equity investment based on the State’s proportional share of the carrying amount of net assets of those sectors (before consolidation adjustments), in accordance with AASB 1049.

The General Government Sector has irrevocably elected to account for the change in the carrying amount of these investments in a manner consistent with the treatment of equity instruments measured at FVOCI in AASB 9 that would otherwise be measured at FVTPL.

Movements in the carrying amount are taken through ‘Other Economic Flows - Other Comprehensive Income’. These gains and losses on these investments are never reclassified to the ‘Operating Result’. Dividends are recognised as income as part of ‘Revenues from Transactions’ when the right of payment has been established.

Note 37: Details of Consolidated Entities details the entities of which the Government has control.

The carrying amounts of the investments at year end is summarised below:


2019-20 2018-19 2019-20 2018-19 Restated(a)

$m $m $m $m

Investments in Other Public Sector Entities

Investments in Public Non-Financial Corporations (PNFC) 107,193 103,568 ... ... Less Investment in PNFC by Public Financial Corporations ... ... ... ...Net Investments in Public Non-Financial Corporations 107,193 103,568 ... ... Consolidation Adjustment to Investment in Net Assets (197) (260) ... ...Investments in Public Financial Corporations (51) 855 ... ... Consolidation Adjustment to Investment in Net Assets (6,696) (5,590) ... ...

100,249 98,573 ... ...

The annual movements of the investments are summarised below:


2019-20 2018-19 Restated(a)

$m $m

Investment in Other Public Sector Entities at Beginning of Year 98,573 112,556Net Contributions to/(Returns from) Other Sectors by/(to) Owner 6,655 (6,627)Revaluation Gain/(Loss) for Period in Other Sectors (3,936) (4,340)Movement for the Period in the Consolidation Adjustment (1,043) (3,016)

Total Investments in Other Sector Entities at End of Year 100,249 98,573


Note 11


Investments in Associates

Equity investments in associates are accounted for using the Equity Method.

Movements in the State’s share of profits are recognised in the operating result, split between dividends recognised as ‘Revenue from Transactions’ and the share of earnings excluding dividends recognised as ‘Other Economic Flows – Included in the Operating Result’ based on the State’s share of ownership. Revaluation movements in the State’s share of equity are recognised as a change to reserves and recognised as ‘Other Economic Flows – Other Comprehensive Income’.

Investments in Associates Accounted for General Total Using the Equity Method comprise the State's share in: Government Sector State Sector 2019-20 2018-19 2019-20 2018-19

$m $m $m $m

Ausgrid(a) 3,624 3,643 3,624 3,643Endeavour Energy(a) 1,919 1,978 1,919 1,978West Connex Group(b) 6,323 6,424 6,323 6,424Other Entities ... 10 ... 12

11,866 12,055 11,866 12,057

(a) This represents the State’s retained interest of 49.6% in these entities. (b) This represents the State’s retained interest of 49.0% in this entity.

Ausgrid

Ausgrid is the operator of one of the leading electricity networks in Australia, distributing electricity to the Sydney, Central Coast and Hunter regions of New South Wales.

The State holds 49.6 per cent of Ausgrid via a corporation constituted under the Electricity Retained Interest Corporations Act 2015, named Electricity Retained Interest Corporation - Ausgrid. The remaining 50.4 per cent is owned by the private sector by IFM Investors and Australian Super in equal shares, operating the network under a 99-year lease.

As the State does not control the entity, it has applied the equity method to account for its investment in Ausgrid. The following table summarises information on the State’s investment in Ausgrid.

General Total


The State's share of Ausgrid's assets and liabilities Current Assets 395 321 395 321Non-Current Assets 10,921 10,537 10,921 10,537Current Liabilities (279) (354) (279) (354)Non-Current Liabilities (7,413) (6,861) (7,413) (6,861)

Net Assets(a) 3,624 3,643 3,624 3,643

The State's share of Ausgrid's profit

Revenue 1,136 1,289 1,136 1,289

Profit/(Loss) Before Income Tax 95 80 95 80Distribution Income Recognised ... (166) ... (166)

Profit After Income Tax 95 (86) 95 (86)

Other Comprehensive Income (114) (246) (114) (246)

Total Comprehensive Income (19) (332) (19) (332)

(a) During 2019-20, the State invested an additional $14.88 million in Ausgrid (2018-19: $21 million).

Note 11


Endeavour Energy

Endeavour Energy is the operator of the electrical distribution network for western Sydney, the Blue Mountains, the Southern Highlands and the Illawarra region of NSW.

New South Wales holds 49.6 per cent of Endeavour Energy via a corporation constituted under the Electricity Retained Interest Corporations Act 2015, named Electricity Retained Interest Corporation – Endeavour Energy. The remaining 50.4 per cent is owned by the private sector by the Edwards partner consortium, operating the network under a 99-year lease.

As the State does not control the entity, it has applied the equity method to account for its investment in Endeavour Energy. The following table summarises information on New South Wales’ investment in Endeavour.

General Total


The State's share of Endeavour's assets and liabilities Current Assets 298 272 298 272Non-Current Assets 5,173 5,000 5,173 5,000Current Liabilities (177) (171) (177) (171)Non-Current Liabilities (3,375) (3,122) (3,375) (3,122)

Net Assets 1,919 1,978 1,919 1,978

The State's share of Endeavour's profit

Revenue 667 633 667 633

Profit/(Loss) Before Income Tax 113 142 113 142Distribution income recognised (85) (33) (85) (33)Profit After Income Tax 28 108 28 108

Other Comprehensive Income (86) (163) (86) (163)


WestConnex Group

WestConnex is the largest road infrastructure project in Australia, linking Western and South-Western Sydney with the City, airport and port in a 33-kilometre continuous motorway.

The State holds 49 per cent of the WestConnex Group via a corporation constituted under the Corporations Act 2001, named Roads Retained Interest Pty Ltd. The remaining 51 per cent is owned by the private sector by Sydney Transport Partners Consortium. The WestConnex Group is constructing and operating the road network under a concession agreement expiring in 2060.

The State’s share of WestConnex’s assets and liabilities and profits in the State’s results to 30 June 2019 represents the period from 27 September 2018 when the State’s interest was acquired by Retained Roads Interest Pty Ltd.

Note 11


As the State does not control the entity, it has applied the equity method to account for its investment in the WestConnex Group. The following table summarises information on the State’s investment in the WestConnex Group.

General Total


The State's share of WestConnex Group's assets and liabilities Current Assets 495 684 495 684Non-Current Assets 10,218 9,798 10,218 9,798Current Liabilities (103) (149) (103) (149)Non-Current Liabilities (4,287) (3,909) (4,287) (3,909)

Net Assets 6,323 6,424 6,323 6,424

The State's share of WestConnex's profit

Revenue 705 929 705 929

Profit/(Loss) Before Income Tax (68) (1) (68) (1)Income Tax Expense (7) (4) (7) (4)Distribution income recognised ... (19) ... (19)

Profit After Income Tax (75) (24) (75) (24)

Other Comprehensive Income (43) (139) ... (139)


Other Equity Investments

The State’s other equity investments comprise of investments in listed and unlisted equity securities measured at FVTPL.

Other equity investments are classified at initial recognition as either measured at FVTPL or are irrevocably elected by the State to be measured at FVOCI. These equity investments are measured at their fair value plus, in the case of an equity investments not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the instrument. The State has not elected to measure any of these equity investments at FVOCI throughout the 2019-20 financial year (30 June 2019: Nil).

Other equity investments held by the Total State Sector predominately comprise of TCorpIM Fund Trust investments in equity securities. In total, TCorpIM Fund Trusts have investments in equity securities amounting to $21,741 million (2018-19: $24,468 million). Since 2016-17, the State has invested a major component of the Restart NSW money in TCorpIM Fund Trust investments.

Further information regarding fair value measurement and market risk of other equity investments are described in Note 26: Financial Instruments.

General Total


Other Equity Investments Comprise: Other Equity Investments - At Fair Value Through Profit and Loss(a)(b) 7 8 21,741 24,468

7 8 21,741 24,468

(a) Other equity investments are mandatorily measured at FVTPL. A portion of equity investments held within TCorpIM Fund Trusts are expected to be realised within 12 months, However, an estimate of that amount cannot be reliably determined as at the reporting date.

(b) A portion of equity investments held within TCorpIM Fund Trusts are expected to be will be realised within 12 months, However, an estimate of that amount cannot be reliably determined as at the reporting date.

Note 12


Note 12: Inventories

Inventories (other than those held for distribution) are valued at the lower of cost and net realisable value. Cost is calculated using the weighted average cost or the ‘first in first out’ method. Land held for resale, for government authorities that trade in land, is recorded taking account of acquisition costs, development and other costs.

Inventories held for distribution are stated at cost, adjusted when applicable for any loss of service potential, in accordance with AASB 102 Inventories. A loss of service potential is identified and measured when current replacement cost is lower than the carrying amount.

The cost of inventories acquired at no cost or for nominal consideration on the date of acquisition is recognised at its current replacement cost. The current replacement cost is the cost the State would incur to acquire the asset on the reporting date.

General Total


Current 1,062 261 1,251 481Non-current 126 138 492 392 1,188 399 1,743 873

Inventories Comprise(a):

Raw Materials 11 10 49 43Work in Progress 7 13 11 17Finished Goods 29 39 29 41Consumable Stores(b) 3 5 92 136Land Held for Resale 118 132 485 435Inventories Held for Distribution Consumables(b)(c) 1,021 199 1,077 202

1,188 399 1,743 873

(a) Comparatives for inventories have been restated, to be consistent with changes in presentation for the current reporting period. (b) $177 million of medical inventories for the General Government Sector and Total State Sector have been reclassified from consumable

stores inventories to inventories held for distribution (consumables) for 2018-19. (c) The increase in consumables held for distribution primarily relate to medical and drug supplies used in the provision of public health

services, firefighting consumables, and protective and operational clothing required due to COVID-19 and natural disaster events.

Land held for resale, for government agencies that trade in land, has been recorded at:

General Total


Acquisition Cost 27 81 135 185Development Cost 90 51 349 250 118 132 485 435

Note 13


Note 13: Assets Classified as Held for Sale

Non-current assets (or disposal groups) are classified as held for sale, where their carrying amount will be recovered principally through a sale transaction and not through continuing use.

For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset (or disposal group), and an active program to locate a buyer and complete the plan must have been initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets (or disposal groups) held for sale are recognised at the lower of carrying amount and fair value less costs to sell. These assets are not depreciated while they are classified as held for sale.

The assets classified as held for sale at 30 June 2020 were:

General Total


Non-Current Assets Held for Sale Land and Buildings 286 213 335 274 Plant and Equipment 1 2 1 2 Infrastructure Systems ... 7 ... 7

286 222 335 283


Non-Current Assets Held for Sale Infrastructure NSW (a) 165 71 165 71 Ministry of Health 9 56 9 56 Transport for NSW(b) 40 15 40 15 Sydney Metro(b) 16 17 16 17 New South Wales Land and Housing Corporation ... ... 41 56 Department of Communities and Justice 27 ... 27 ... Department of Customer Service(c) 19 26 19 26 Other(b) 11 38 19 42 286 222 335 283

(a) In 2018-19, $71 million was reported by Barangaroo Delivery Authority. The agency was abolished on 1 July 2019 under the Administrative Arrangements (Administrative Changes – Public Service Agencies) Order 2019. On abolition, the assets, rights and liabilities (including Non-Current Assets Held for Sale) were transferred to Infrastructure NSW.

(b) In 2018-19, assets classified as held for sale by Transport for NSW and Sydney Metro were reported in Other. (c) In 2018-19, $26 million was reported by the Department of Finance, Services and Innovation. The agency was abolished on 1 July 2019

under the Administrative Arrangements (Administrative Changes – Public Service Agencies) Order 2019. On abolition, the assets, rights and liabilities (including Non-Current Assets Held for Sale) were transferred to the newly established Department of Customer Services.

Note 14


Note 14: Property, Plant and Equipment

Property, plant and equipment comprises three asset classes: land and buildings, plant and equipment, and infrastructure systems.

Property, plant and equipment is initially recognised at cost, in accordance with AASB 116 Property, Plant and Equipment (AASB 116). Those assets acquired at no cost or for nominal consideration are initially recognised at their fair value at the date of acquisition. The cost of assets constructed for own use includes the cost of materials, direct labour, and foreign exchange gains and losses arising during construction, as well as an appropriate proportion of variable and fixed overhead costs that can be reliably attributed to the assets.

Property, plant and equipment is subsequently measured at fair value in accordance with AASB 116, AASB 13 and NSW Treasury Policy Paper 14-01 Accounting Policy: Valuation of Physical Non-Current Assets at Fair Value.

In general, property, plant and equipment with a value greater than $5,000 is capitalised except for computer equipment which is normally capitalised irrespective of the $5,000 threshold where it is considered to be part of a network of assets. Assets are not recognised where they cannot be reliably measured.

Revaluation of Property, Plant and Equipment

Property, plant and equipment is measured at the highest and best use by market participants that is physically possible, legally permissible and financially feasible. The highest and best use must take into account the characteristics of the asset being measured, including any socio-political restrictions imposed by government. In most cases, after taking into account these considerations, the highest and best use is the existing use.

Revaluations are made with sufficient regularity to ensure the carrying amount of each asset in the class does not differ materially from its fair value at the reporting date. Interim revaluations are conducted between comprehensive revaluations where cumulative changes to indicators suggest fair value may differ materially from the carrying value.

The market or income approach is used to fair value the following types of property, plant and equipment:

Land under roads is valued using a market approach at existing use, based on an englobo valuation approach or proxy such as open space land (i.e. as such land generally has no feasible alternative use, is undeveloped and publicly accessible).

Land under water is valued using a market approach with reference to adjacent land values, having regard to zoning restrictions, access, location, size, topography and other characteristics or with reference to land that has a low economic value adjusted for differences in location, restriction and uses.

Other land, including Crown leasehold land, is valued using a market approach, based on a valuation per hectare per each land category type.

Non-specialised buildings, which include commercial and general-purpose buildings for which there is a secondary market, are valued using either approach.

Certain heritage assets, including artworks, book collections, philately and coin collections are valued using a market or cost approach.

The fair value of cash generating assets, including water and energy distribution networks, is estimated using an income approach.

For assets valued using the income approach or market approach, any accumulated depreciation is eliminated against the gross carrying amount of the assets to which they relate, and the net asset carrying amount is increased or decreased by the revaluation increment or decrement.

The cost approach (i.e. current replacement cost) reflects the amount that would be required currently to replace the service capacity of an asset, adjusted for obsolescence. The cost approach is used to fair value the following types of assets:

Specialised buildings designed for a specific, limited purpose with no feasible alternative use. This includes hospitals, schools, court houses, emergency services buildings, buildings to house specialised plant and infrastructure and some heritage properties.

Heritage assets, including library and museum collections that are of a specialised nature with no feasible alternative use.

Note 14


Where the State re-values non-current assets using the cost approach, the gross amount and accumulated depreciation are separately restated.

Revaluation increments increase the revaluation surplus, except that, to the extent that an increment reverses a revaluation decrement for that class of asset previously recognised as a loss in the operating result, the increment is recognised as a gain. Revaluation decrements are charged to the revaluation surplus to the extent that a credit exists in the revaluation surplus in respect of the same class of asset. Any remaining decrements are recognised as a loss. Where an asset that has previously been revalued is disposed of, the remaining balance in the revaluation surplus is transferred to accumulated funds.

Non-specialised assets with short useful lives are measured at depreciated historical cost as an estimate for fair value.

Impairment of Property, Plant and Equipment

As a not-for-profit entity, impairment under AASB 136 Impairment of Assets (AASB 136) arises for the State in rare circumstances.

The State assesses at each reporting date whether there is any indication that property, plant and equipment may be impaired, in accordance with AASB 136. If such an indication exists, or when annual impairment testing for an asset is required, the State estimates the recoverable amount of the asset. An impairment loss is recognised where the carrying amount of property, plant and equipment exceeds the recoverable amount. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Specialised assets held for continuing use of their service capacity are rarely sold and their cost of disposal is typically negligible. Their recoverable amount is expected to be materially the same as fair value, where they are regularly revalued under AASB 13.

Impairment losses are recognised in ‘other economic flows – included in operating result’ or in ‘other economic flows – other comprehensive income’ to the extent that an impairment loss on a revalued asset reduces the revaluation surplus for that asset.

After an impairment loss has been recognised, it is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised in ‘other economic flows – included in operating result’ unless the asset is carried at revalued amount. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase in accordance with AASB 116.

Assets Acquired by Leases

From 1 July 2019, AASB 16 requires a lessee to recognise a right-of-use asset for most leases. The State has elected to present right-of-use assets separately in the Statement of Financial Position.

Therefore at that date property, plant and equipment under leases previously treated as finance leases under AASB 117 are derecognised. The right-of-use assets arising from these leases are recognised and included in the separate line item together with those arising from leases previously treated as operating leases under AASB 117.

Until 30 June 2019, AASB 117 distinguished between finance leases that effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of the leased assets, and operating leases under which the lessor does not transfer substantially all the risks and rewards.

Property, plant and equipment at 30 June 2019 includes non-current assets acquired under finance leases only. The assets are recognised at fair value or, if lower, the present value of the minimum lease payments, at the inception of the lease. Property, plant and equipment does not include amounts in respect of operating leases.

Property, plant and equipment acquired under finance leases are depreciated over the asset’s useful life. However, if there is no reasonable certainty that the State will obtain ownership at the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Further information on leases is contained in Note 28: Leases.

Note 14


Privately Financed Project Assets Accounted for as Leased Assets

The State has adopted the option to not apply AASB 16 to assets that would be classified as service concession assets in accordance with AASB 1059. The State continues to apply its existing accounting policy TPP06-8 to these assets until AASB 1059 is applied. Leased assets covered by this accounting policy continue to apply the principles of AASB 117.

Further information on privately finance projects (PFP) is contained in Note 16: Other Non-Financial Assets and Note 28: Leases.

Depreciation of Property, Plant and Equipment

Property, plant and equipment is depreciated (net of its residual value) over its useful life, in accordance with AASB 116. Depreciation is generally allocated on a straight-line basis.

Land is not a depreciable asset. Certain heritage assets, including original artworks and collections and heritage buildings, may not have a limited useful life because appropriate curatorial and preservation policies are adopted. Such assets are not subject to depreciation. The decision not to recognise depreciation for these assets is reviewed annually.

The residual values, residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end. Average useful lives for major assets (for both property, plant and equipment held and used by the State and where the State is a lessor under operating leases) are as follows(a):

Buildings Public Housing 50 years Schools and Colleges 20-105 years Hospitals and Health Buildings 40 years Plant and Equipment Computer Hardware 2-5 years Rail Rolling Stock (leased and non-leased) 30-42 years Infrastructure Electricity System Assets 1-50 years Water System Assets 3-200 years Roads Pavements 4-100 years Roads Earthworks 50 years Roads Earthworks (other) – not depreciated indefinite life Bridges and Tunnels 100 years

(a) The average useful life of assets can vary depending on the various asset classes, types and components of assets within a category. For example, structural components generally have a longer useful life than electrical and mechanical components.

Note 14



Total Property, Plant and Equipment

Fair Value Land and Buildings

Plant and Equipment

Infrastructure Systems Total

$m $m $m $m

At 30 June 2019(a)

Gross Carrying Amount 122,980 18,751 161,887 303,618

Accumulated Depreciation and Impairment (32,232) (6,589) (43,697) (82,518)

Net Carrying Amount 90,748 12,162 118,190 221,100

At 30 June 2020




Reconciliation: Land and Buildings

Plant and Equipment


$m $m $m $m

Year Ended 30 June 2020 Net Carrying Amount at Start of Year(a) 90,748 12,162 118,190 221,100

Opening Balance Adjustments(b) 35 28 14 77

Derecognition of Finance Lease Assets on Initial Application of AASB 16 (651) (701) (1) (1,353)

Adjusted Net Carrying Amount at Start of Year 90,132 11,489 118,202 219,824

Additions 5,380 1,213 11,234 17,828

Assets Reclassified To Held for Sale (129) 1 0 (128)

Disposals (195) (114) (1,072) (1,381)

Net Revaluations Recognised In Reserves(c) 1,590 124 2,550 4,263

Depreciation Expense (1,742) (901) (1,893) (4,536)

Other Movements (215) 726 (4,616) (4,105)

Net Carrying Amount at End of Year 94,822 12,538 124,406 231,766


Plant and Equipment


$m $m $m $m

At 30 June 2018(a)




At 30 June 2019(a)





Plant and Equipment


$m $m $m $m

Year Ended 30 June 2019

Net Carrying Amount at Start of Year 83,390 10,941 102,147 196,479

Corrections to Prior Period(a) 694 66 (976) (216)

Restated Net Carrying Amount at Start of Year 84,084 11,007 101,171 196,263

Additions 5,474 1,320 9,779 16,743

Assets Reclassified To Held for Sale (49) (2) ... (50)

Disposals (188) (142) (1,382) (1,712)

Net Revaluations Recognised In Reserves(a) 2,370 (28) 4,813 7,155

Depreciation Expense(a) (1,668) (872) (1,868) (4,408)

Other Movements 723 878 5,675 7,276

Net Carrying Amount at End of Year(a) 90,748 12,162 118,190 221,100

(a) Refer to Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior periods. (b) These adjustments have been made due to information becoming available after the release of the 2018-19 Total State Sector Accounts. (c) Includes revaluations of $4.5 billion and impairment of $332 million recognised in reserves for the current reporting period. Due to the

current economic environment fewer revaluation increments were reported and as such this movement is expected.

Note 14


Property, Plant and Equipment Held and Used by the GGS


Plant and Equipment


$m $m $m $m

At 30 June 2019




At 30 June 2020





Plant and Equipment


$m $m $m $m

Year Ended 30 June 2020 Net Carrying Amount at Start of Year 85,674 12,085 118,093 215,852

Opening Balance Adjustments(a) 35 28 14 77

Derecognition of Finance Lease Assets on Initial Application of AASB 16 (651) (701) (1) (1,353)


Additions 5,358 1,197 11,222 17,777


Disposals (181) (114) (1,072) (1,367)

Net Revaluations Recognised In Reserves 1,563 122 2,562 4,247

Depreciation Expense (1,648) (891) (1,892) (4,431)

Other Movements (1,116) 726 (4,979) (5,370)


(a) These adjustments have been made due to information becoming available after the release of the 2018-19 Total State Sector Accounts.

Note 14


Property, Plant and Equipment Where the GGS is the Lessor Under Operating Leases


Plant and Equipment


$m $m $m $m

At 30 June 2019

Gross Carrying Amount 5,479 80 99 5,658

Accumulated Depreciation and Impairment (405) (3) (2) (410)

Net Carrying Amount 5,074 77 97 5,248

At 30 June 2020





Plant and Equipment


$m $m $m $m


Net Carrying Amount at Start of Year 5,074 77 97 5,248

Additions 22 16 12 50

Assets Reclassified To Held for Sale (0) ... ... (0)

Disposals (14) ... ... (14)

Net Revaluations Recognised In Reserves 26 2 (12) 16

Depreciation Expense (93) (10) (1) (105)

Other Movements 902 ... 363 1,265

Net Carrying Amount at End of Year 5,917 84 460 6,460

Note 14


Total State Sector

Total Property, Plant and Equipment


Plant and Equipment


$m $m $m $m

At 30 June 2019(a)




At 30 June 2020





Plant and Equipment


$m $m $m $m

Year Ended 30 June 2020 Net Carrying Amount at Start of Year(a) 166,346 18,075 166,835 351,255

Opening Balance Adjustments(b) (8) 104 18 115Derecognition of Finance Lease Assets on Initial Application of AASB 16 (961) (2,608) (1) (3,570)


Additions 6,362 1,538 14,393 22,293


Disposals (429) (120) (1,107) (1,657)

Net Revaluations Recognised In Reserves(c) 641 128 3,773 4,542

Depreciation Expense (2,674) (1,251) (3,459) (7,384)

Other Movements (602) 791 (255) (66)



Plant and Equipment


$m $m $m $m

At 30 June 2018(a)




At 30 June 2019(a)





Plant and Equipment


$m $m $m $m


Corrections to Prior Period(a) ... ... (976) (976)

Restated Net Carrying Amount at Start of Year 161,627 17,367 157,182 336,176

Additions 6,431 2,120 13,457 22,008

Assets Reclassified To Held for Sale (401) (24) ... (425)

Disposals (507) (173) (1,465) (2,146)

Net Revaluations Recognised In Reserves(a) 2,484 (576) 5,367 7,275

Depreciation Expense(a) (2,582) (1,257) (3,212) (7,051)

Other Movements (706) 618 (4,496) (4,585)

Net Carrying Amount at End of Year(a) 166,346 18,075 166,835 351,256

(a) These adjustments have been made due to information becoming available after the release of the 2018-19 Total State Sector Accounts. (b) Includes revaluations of $4.8 billion and impairment of $335 million recognised in reserves for the current reporting period. Due to the

current economic environment fewer revaluation increments were reported and as such this movement is expected. (c) Includes revaluations of $4.8b and impairment of $335m recognised in reserves in the current reporting period. Due to the current economic

environment fewer revaluation increments were reported and as such this movement is expected.

Note 14


Property, Plant and Equipment Held and Used by the TSS


Plant and Equipment


$m $m $m $m

At 30 June 2019




At 30 June 2020





Plant and Equipment


$m $m $m $m


Opening Balance Adjustments(a) (8) 104 18 115Derecognition of Finance Lease Assets on Initial Application of AASB 16 (961) (2,608) (1) (3,570)


Additions 6,141 1,518 14,381 22,039


Disposals (257) (120) (1,107) (1,485)

Net Revaluations Recognised In Reserves 2,364 128 3,785 6,276

Depreciation Expense (2,082) (1,239) (3,458) (6,779)

Other Movements (1,213) 789 (618) (1,042)


(a) These adjustments have been made due to information becoming available after the release of the 2018-19 Total State Sector Accounts.

Note 14


Property, Plant and Equipment Where the TSS is the Lessor Under Operating Leases


Plant and Equipment


$m $m $m $m

At 30 June 2019




At 30 June 2020





Plant and Equipment


$m $m $m $m



Additions 221 21 12 254

Assets Reclassified To Held for Sale (39) ... ... (39)

Disposals (172) ... ... (172)

Net Revaluations Recognised In Reserves (1,722) 0 (12) (1,734)

Depreciation Expense (592) (13) (1) (606)

Other Movements 611 2 363 976

Net Carrying Amount at End of Year 56,771 82 460 57,313

Note 14


Fair Value Measurement of Non-Financial Assets

The table below sets out the State’s non-financial assets measured at fair value according to the fair value hierarchy at reporting date.

Fair Value Hierarchy of Non-Financial Assets


30 June 2020 Level 1 Level 2 Level 3 Historical Cost Total $m $m $m $m $m

Fair Value Hierarchy Property, Plant and Equipment Land and Buildings ... 15,104 79,718 ... 94,822

Plant and Equipment(a) ... 3,898 4,629 4,012 12,538

Infrastructure Systems ... 123 124,282 ... 124,406

Assets Held for Sale (Note 13) ... 260 26 ... 286

... 19,385 208,656 4,012 232,053

(a) Assets measured using depreciated historical cost as a surrogate for fair value do not require fair value hierarchy disclosures under AASB 13.


Fair Value Hierarchy(a) Property, Plant and Equipment Land and Buildings ... 15,366 75,383 ... 90,748

Plant and Equipment(b) ... 3,704 4,513 3,945 12,162



... 19,418 197,960 3,945 221,322

(a) Refer to Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior periods. (b) Assets measured using depreciated historical cost as a surrogate for fair value do not require fair value hierarchy disclosures under

AASB 13.

Total State Sector


Fair Value Hierarchy Property, Plant and Equipment Land and Buildings ... 16,978 151,525 ... 168,502

Plant and Equipment(a) ... 3,943 8,163 4,551 16,657



... 21,303 339,838 4,551 365,690


Fair Value Hierarchy(a) Property, Plant and Equipment Land and Buildings ... 17,386 148,960 ... 166,346

Plant and Equipment(b) ... 3,733 9,875 4,467 18,075



... 21,468 325,603 4,467 351,538

(a) Assets measured using depreciated historical cost as a surrogate for fair value do not require fair value hierarchy disclosures under AASB 13.

(b) Refer to Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior periods.

Note 14


Reconciliation of Recurring Level 3 Fair Value Measurements for Non-Financial Assets


Land and Buildings

Plant and Equipment

Infrastructure Systems

Assets Held for

Sale

Total Recurring

Level 3 Fair Value

$m $m $m $m $m


Fair Value at Start of Year(a) 75,383 4,513 118,046 19 197,961

Opening balance fair value adjustments(b) 879 12 (269) ... 622

Derecognition of Finance Lease Assets on Initial Application of AASB 16 (344) (701) (1) ... (1,046)

Adjusted Fair Value at Start of Year 75,918 3,824 117,775 19 197,537

Additions 5,179 275 11,679 0 17,134

Revaluations Recognised in Other Comprehensive Income 1,443 35 2,468 ... 3,946

Transfers into Level 3 448 0 (46) ... 402

Transfers out of Level 3 (414) (40) (8) (16) (478)

Disposals (155) (4) (1,091) (4) (1,254)

Depreciation Expense (1,644) (128) (1,920) ... (3,692)

Other Movements (1,057) 666 (4,575) 27 (4,939)

Fair Value at End of Year 79,718 4,629 124,282 26 208,656

Land and Buildings

Plant and Equipment


Assets Held for

Sale

Total Recurring

Level 3 Fair Value

$m $m $m $m $m


Fair Value at Start of Year 67,654 3,182 101,883 111 172,830

Corrections to Prior Period(a) 694 66 (976) ... (216)

Restated Fair Value at Start of Year 68,348 3,248 100,907 111 172,614

Additions 3,708 266 9,841 10 13,824

Revaluations Recognised in Other Comprehensive Income(a) 2,825 73 2,978 ... 5,877

Transfers into Level 3 532 (0) (1) ... 531

Transfers out of Level 3 (98) (1) 0 ... (99)

Disposals (207) (1) (1,141) (2) (1,351)

Depreciation Expense(a) (1,570) (174) (1,867) ... (3,611)

Other Movements 1,843 1,102 7,327 (100) 10,173

Fair Value at End of Year(a) 75,383 4,513 118,046 19 197,961

(a) Refer to Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior periods. (b) These adjustments have been made due to information becoming available after the release of the 2018-19 Total State Sector Accounts.

Note 14


Total State Sector

Land and Buildings

Plant and Equipment


Assets Held for

Sale

Total Recurring

Level 3 Fair Value

$m $m $m $m $m


Fair Value at Start of Year(a) 148,961 9,875 166,691 78 325,605

Opening balance fair value adjustments(b) 1,634 86 (264) ... 1,457

Derecognition of Finance Lease Assets on Initial Application of AASB 16 (654) (2,594) (1) ... (3,249)

Adjusted Fair Value at Start of Year 149,941 7,367 166,425 78 323,812

Additions 6,035 472 14,987 0 21,494

Revaluations Recognised in Other Comprehensive Income 286 35 3,690 ... 4,011

Transfers into Level 3 448 0 (46) ... 402

Transfers out of Level 3 (414) (75) (8) (16) (512)

Disposals (342) (8) (1,126) (59) (1,535)

Depreciation Expense (2,564) (398) (3,523) 0 (6,485)

Other Movements (1,864) 769 (327) 71 (1,351)

Fair Value at End of Year 151,525 8,163 180,074 75 339,838

Land and Buildings

Plant and Equipment


Assets Held for

Sale

Total Recurring

Level 3 Fair Value

$m $m $m $m $m


Fair Value at Start of Year 144,080 9,150 157,862 218 311,309

Corrections to Prior Period(a) ... ... (976) ... (976)

Restated Fair Value at Start of Year 144,080 9,150 156,886 218 310,333

Additions 5,828 893 13,702 10 20,433

Revaluations Recognised in Other Comprehensive Income(a) 2,606 (472) 3,511 ... 5,645

Transfers into Level 3 527 ... 21 ... 549

Transfers out of Level 3 (98) (1) ... ... (99)

Disposals (522) (12) (1,225) (78) (1,837)

Depreciation Expense(a) (2,405) (481) (3,249) ... (6,136)

Other Movements (1,056) 798 (2,955) (71) (3,284)

Fair Value at End of Year(a) 148,961 9,875 166,691 78 325,605

(a) Refer to Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior periods. (b) These adjustments have been made due to information becoming available after the release of the 2018-19 Total State Sector Accounts.

Note 14


Valuation techniques, inputs and processes

Land and Buildings

Most of the State’s land and buildings comprise of specialised assets such as public housing, schools, TAFE colleges, hospitals, railway stations and rail associated buildings, justice buildings (including court houses, prisons and juvenile justice centres), the Olympic Stadium and Arena, Sydney Opera House, police stations, Crown land and land under roads.

Non-specialised land and buildings are generally classified as Level 2. Specialised land and buildings are generally classified as Level 3. Market evidence is used where relevant and then adjusted to take account of factors such as the location, type and constraints around the use of the asset. The valuation approaches for the main types of assets within Land and Buildings are set out below.

Public Housing

Public housing (mainly classified as Level 3) is determined by applying a mass appraisal methodology with an annual rolling benchmark valuation approach whereby a third of benchmark properties are valued by accredited property valuers with reference to market sales comparisons to calculate a market movement index. The market movement index is applied to the remaining two-thirds of the benchmark properties. All benchmark properties are grouped within thirteen geographical reporting regions. The median value increase in each geographical group is applied to the respective group of properties within the property portfolio of the group. Adjustments to each property are made for any significant different characteristic from benchmark properties. The rolling benchmark valuation process is performed annually as at 31 December. An uplift market movement factor has been provided from a registered valuer for the six months ended 30 June.

Schools and Education Facilities

School and education land and buildings are mainly classified as Level 3. The valuers use current market sales evidence to determine the market value of land without restrictions and then apply a discount rate to these values, to adjust for the restricted use of the land. The valuations use the weighted average market value per square metre of land. School and TAFE buildings are valued using the current replacement cost method. Due to the size of the portfolio a mass appraisal technique is used. Replacement cost rates for the asset components of a building are determined based on the cost of recently built buildings. The valuation takes account of the weighted average replacement cost per square metre for the building shell, fit-outs, external services, landscaping and demountables. Adjustments are then made for location and special need requirements. Useful lives and depreciated rates are based on internal analysis.

Hospitals

Land is valued using a market approach, comparing similar assets and observable inputs. Where the land is restricted, a discount rate is applied to adjust for the restricted use of the land. The value utilises a market sales comparison approach taking account of recent sales of comparable properties. Hospital buildings are mainly classified as Level 3 and are valued using the current replacement cost method. The current replacement cost per square metre is assessed by reference to external publications with allowances made for regional locations. Remaining economic life is assessed based on physical deprecation and obsolescence.

Roads

Land under roads is valued using the Urban Average Rateable Value (ARV) per hectare within each Local Government Area adjusted by an ‘open space’ ratio. The valuation takes account of Local Government Area rateable land values and the land area under roads.

Note 14


Sensitivity of the Fair Value Measurement

Public Housing Higher/(lower) market sales values reflect higher/(lower) valuations.

Schools and Education Facilities

The estimated fair value of land would increase/(decrease) if the value per square metre was higher/ (lower). The estimated fair value of buildings would increase/(decrease) if the replacement cost per square metre for the asset components was higher/(lower).

Hospitals The estimated fair value of land would increase/(decrease) if the value per square metre was higher/ (lower). The estimated fair value of buildings would increase/(decrease) if the replacement cost per square metre for the asset components was higher/(lower).

Land under Roads The estimated fair value would increase/(decrease) if the weighted current year Urban Average Rateable Value increases/(decreases).

Crown Land

Crown land is generally classified as Level 2 and is valued using the market value approach by utilising market comparable land. Valuations take account of the sale price of comparable land and are adjusted for the size of the land and the long-term land appreciated rate. Discounts are applied as necessary, especially to land within waterways and those under undeveloped crown roads to reflect value in use. The estimated fair value would increase/(decrease) if the comparable land values increase/(decrease).

Plant and Equipment

Plant and equipment comprise both specialised and non-specialised assets. Non-specialised assets are generally classified as Level 2. The main specialised assets are rail rolling stock, public buses and ferries, and museum and library collections. The specialised assets are generally classified as Level 3. Assets measured using depreciated historical cost as an estimate for fair value do not require fair value hierarchy disclosures under AASB 13.

Rail Rolling Stock

Rolling stock is valued using a current replacement cost method. Replacement cost rates are based on domestic and international vehicles adjusted by an optimisation factor to reflect the technical and functional obsolescence of the fleet sub-types relative to the modern equivalent.

Public Buses

Public buses are valued using the Optimised Replacement Cost (ORC) which is the minimum that it would cost, in the normal course of business, to replace existing asset with a technologically modern equivalent new asset with the same economic benefits, allowing for any differences in the quantity and quality of input and in operating costs. The ORC estimates are based on the most recent cost prices for the buses and current pricing for Rural and Regional Urban and School bus types, as quoted by numerous chassis and bus providers.

Ferries

Ferries are valued using a current replacement cost method. Replacement cost rates are based on the quoted cost for replacing the vessels.

Collection Assets

Collection assets are classified as either Level 2 or Level 3 based on the level of inputs used in the valuation. Valuation methods vary depending on the type of collection assets. All assets regarded as highly significant are individually valued, with other assets valued by category of item using appropriately sized samples. In most instances, the sampling techniques are performed by professional statisticians. Market values are based on market evidence with reference to recent sales of items that are similar. Where there is a lack of market-based evidence, re-collection costs are used.

Note 14



Rolling Stock The estimated fair value would increase/(decrease) if the replacement cost rates were higher/(lower).

Buses The estimated fair value would increase/(decrease) if the replacement cost rates for buses increased/(decreased).

Ferries The estimated fair value would increase/(decrease) if the replacement cost rates were higher/(lower).

Collection Assets The estimated fair value would increase/(decrease) if the market prices or recollection cost rates increased/(decreased).


Infrastructure systems comprise the State’s electricity systems, dams and water system assets, road infrastructure and railway infrastructure. Most infrastructure assets are classified as Level 3 because they comprise specialised assets for the delivery of utility and transport services.

Dams and Water System Assets

The majority of the State’s dams and water system assets are valued using an income valuation method. The discounted cash flow technique is used to perform the income approach valuation of the assets. The Regulatory Asset Based Value, determined by the Independent Pricing and Regulatory Tribunal (IPART), is used in conjunction with forecast cash flows and a discount rate.

Road Infrastructure

Road infrastructure is valued using the current replacement cost method. Due to the size of the portfolio a mass appraisal technique is used. Replacement cost rates for each significant asset component are determined based on the unit prices quoted in the most recent construction tender documents or road cost index.

Rail Infrastructure

Track work and related infrastructure is valued using the current replacement cost method. Replacement cost rates for each significant asset component are determined based on the replacement cost of the various asset components.


Electricity Systems The higher the future net cash inflows, the higher the fair value. The higher the discount rate, the lower the fair value.

Dams and Water System Assets

The higher the future net cash inflows, the higher the fair value. The higher the discount rate, the lower the fair value.

Road Infrastructure The estimated fair value would increase/(decrease) if current replacement cost, road index cost or current unit replacement cost for the component increases/(decreases).

Railway Infrastructure The estimated fair value would increase/(decrease) if the replacement cost rates were higher/(lower).

Non-Current Assets Held for Sale

Non-current assets (or disposal groups) held for sale are recognised at the lower of carrying amount and fair value less costs to sell. Most assets are classified at Level 2 as their value has been determined on market observable inputs.

Note 15


Note 15: Intangibles

Intangible assets are measured initially at cost, in accordance with AASB 138 Intangible Assets (AASB 138). Where an asset is acquired free of cost or at nominal cost, the cost is its fair value as at the date of acquisition. The State recognises intangible assets only if it is probable that future economic benefits will flow to the State and the cost of the asset can be measured reliably. All research costs are expensed. Development costs are only capitalised when certain criteria are met.

Intangible assets are subsequently measured at fair value where there is an active market. If there is no active market, the assets are carried at cost less any accumulated amortisation and impairment losses.

Intangible assets with finite lives are amortised under the straight-line method and expensed in the Statement of Comprehensive Income for the period, in accordance with AASB 138. Intangible assets with an indefinite life are not amortised but are tested for impairment annually either individually or at the cash generating unit level.

Intangible assets are tested for impairment where an indicator of impairment exists. If the recoverable amount is less than the carrying amount, the carrying amount is reduced to the recoverable amount and an impairment loss is recognised in ‘other economic flows – included in the operating result’.

Easements are treated as having an indefinite life as the access rights are considered to be permanent.

Assumptions

Computer Software Easements Other

Useful lives Finite (2-10 years) Indefinite Finite (4-10 years)

Amortisation method Straight line Not amortised Various

Internally Generated/Acquired Both Acquired Both

Impairment test/Recoverable amount testing

Where an indicator of impairment exists

Annually and where an indicator of impairment exists

Where an indicator of impairment exists

Note 15



Computer Software Easements(a) Other Total $m $m $m $m

At 1 July 2019

Cost (Gross Carrying Amount) 5,930 349 (0) 6,279

Accumulated Amortisation and Impairment (2,577) (8) 0 (2,585)


At 30 June 2020

Cost (Gross Carrying Amount) 6,223 408 2 6,633



Reconciliation:

Year ended 30 June 2020


Additions 568 ... 37 605Disposals (8) ... (13) (21)Reclassification (to) / from Property, Plant and Equipment (33) 51 (4) 15Impairment (4) ... ... (4)Amortisation (612) (3) (1) (616)Other Movements 26 2 (15) 12Net Carrying Amount at End of Year 3,290 391 5 3,686

(a) Includes easements over land, and water rights.


At 1 July 2018


Accumulated Amortisation and Impairment (2,250) ... ... (2,250)


At 30 June 2019

Cost (Gross Carrying Amount) 5,930 349 (0) 6,279



Reconciliation:



Additions 601 0 140 741Disposals (14) (0) (20) (34)Reclassification (to) / from Property, Plant and Equipment 43 (0) (121) (78)Impairment (26) ... ... (26)Amortisation (609) ... 0 (608)Other Movements (1) 9 0 8Net Carrying Amount at End of Year 3,352 342 0 3,694


Note 15


Total State Sector


At 1 July 2019


Accumulated Amortisation and Impairment (3,614) (8) (11) (3,634)


At 30 June 2020




Reconciliation:



Additions 629 1 94 724Disposals (20) ... (13) (32)Reclassification (to) / from Property, Plant and Equipment (19) 52 (4) 29Impairment (4) (0) 2 (2)Amortisation (760) (3) (8) (771)Other Movements 61 2 (51) 12Net Carrying Amount at End of Year 4,189 497 81 4,768



At 1 July 2018



Net Carrying Amount 4,312 433 (0) 4,745

At 30 June 2019




Reconciliation:


Net Carrying Amount at Start of Year 4,312 433 (0) 4,745

Additions 711 0 258 970Disposals (14) (0) (20) (34)Reclassification (to) / from Property, Plant and Equipment 12 3 (121) (108)Impairment (26) 0 (4) (30)Amortisation (732) (0) (11) (743)Other Movements 40 11 (42) 9Net Carrying Amount at End of Year 4,302 447 60 4,809


Note 16


Note 16: Other Non-Financial Assets

Privately Financed Projects and Service Concession Arrangements

In a privately financed project (PFP), a public-sector entity (the grantor) arranges for the private sector (the operator) to design, finance and build infrastructure and provide associated operational or management services for an agreed period (the service period).

Many PFPs include a service concession arrangement (SCA) as described in Interpretation 129 Service Concession Arrangements: Disclosures. SCAs are defined as an agreement under which the public sector (the grantor) grants a concession to the private sector (the operator) to provide services that give the public access to major economic and social facilities. In effect, the SCA operator (rather than the grantor) is the primary provider of the services with the infrastructure and provides the services to the public.

The State has adopted the option to not apply AASB 16 to assets that would be classified as service concession assets in accordance with AASB 1059. The State continues to apply its existing accounting policy to these assets until AASB 1059 is applied.

PFPs are accounted for in three different ways in accordance with TPP 06-8: Accounting for Privately Financed Projects, depending on the extent of the grantor’s control of the underlying infrastructure, i.e. whether the infrastructure is:

grantor-controlled from the beginning of the service period;

purchased under a deferred payment arrangement or acquired under a finance lease and is grantor-controlled from the beginning of the service period. This is recognised as property, plant and equipment and depreciated over its useful life or the term of the lease in accordance with AASB 116 or AASB 117; or

operator-controlled during the service period and grantor-controlled thereafter. A right to receive the infrastructure for a nominal sum (including zero) at the end of the service period is recognised as revenue and an asset whose value emerges during that period. The accumulated value of the right at the end of the service period equates to the written down replacement cost of the infrastructure at that time. The value is allocated during the service period as if it were the compound value of an annuity discounted at the NSW government bond rate applicable to the purchaser at the commencement of the service period. Any increase or decrease in the fair value of the right to receive the infrastructure that occurs during the service period is recognised as an asset revaluation, similarly to a revaluation of property, plant and equipment.

An up-front contribution by the operator (or grantor) that is substantively part of the PFP is recognised progressively over the period of the concession period, reducing the net cost.

Emerging rights to receive SCA infrastructure are classified as ‘other assets’ and ‘other revenue’. Up-front contributions are classified as ‘other liabilities’ (if received from the operator) or ‘prepayments’ (if paid to the operator).

A land lease in connection with a PFP is accounted for in accordance with leasing accounting standards.

General Total

Government Sector State Sector 2019-20 2018-19(a) 2019-20 2018-19(a) $m $m $m $m

Current 982 630 1,137 725Non-current 5,876 5,635 6,410 5,724

6,858 6,266 7,547 6,449

Other Non-Financial Assets Comprise:

Right to Receive Privately Financed Infrastructure 2,969 2,521 3,074 2,607 Prepayments 3,852 3,697 3,999 3,788 Other 37 48 474 54 6,858 6,266 7,547 6,449

(a) Right to receive privately financed infrastructure and prepayments of the General Government Sector have been reduced respectively by $412 million and $30 million in the comparative 2018-19 financial year for the revision in accounting approach applied for ANZ Stadium. Refer to Note 32: Restatement / Corrections to Prior Years for further information.

Note 16


TotalState Sector

2019-20 2018-19 $m $m

Right to Receive Infrastructure and Prepaid Assets comprise(a):

WestConnex - Stage 1 760 417 WestConnex - Stage 3 1,150 692 NorthConnex 814 820 M7 Motorway - Westlink 720 646 Sydney Light Rail(b) ... 1,057 Other 3,629 2,763 7,073 6,395

(a) Refer to Note 32 Restatement/Corrections to Prior Year Comparatives, for details of correction of prior period error reclassifying ANZ Stadium to Property Plant and Equipment.

(b) As at 30 June 2020, Transport for NSW has capitalised the Sydney Light as rail systems infrastructure following the First Passenger Service Stage 1 (Randwick to Circular Quay) opening on 14 December 2019 and First Passenger Service Stage 2 (Kingsford to Circular Quay) opening on 3 April 2020.

Infrastructure subject to the arrangement

Concession period (duration in years and final year)

Transport M5 34 / 2026 Sydney Harbour Tunnel 30 / 2022 Parramatta Transport Interchange 23 / 2030 Airport Line Railway Stations 30 / 2030 Sydney Light Rail 17 / 2036 Sydney Metro Northwest, Operations, Trains and Systems (OTS) 15 / 2034 Cross City Tunnel 30 / 2035 Waratah Rolling Stock 30 / 2044 Lane Cove Tunnel 41 / 2048 M7 43 / 2048 M2 51 / 2048 NorthConnex 28 / 2048 Eastern Distributor 48 / 2048 WestConnex – Stage 1 43 / 2060 WestConnex – Stage 2 40 / 2060 WestConnex – Stage 3 38 / 2060 Chatswood Transport Interchange 50 / 2064 Health Hawkesbury Hospital 26 / 2022 NSW Health Retrieval Network 10 / 2027 Newcastle Community Health Centre 20 / 2027 Newcastle Mater Hospital Redevelopment 25 / 2033 Long Bay Prison and Forensic Hospital 26 / 2034 Bathurst, Orange & Associated Health Services 24 / 2035 Royal North Shore redevelopment 23 / 2037 Northern Beaches Hospital 20 / 2038 Chris O’Brien Lifehouse 40 / 2053 Various hospital Car Parks 24-25 / various

Utilities Blue Mountain Sewage Transfer Tunnel 35 / 2028 Macarthur Water Treatment Plant 35 / 2030 Rosehill Camellia Recycled Water Project 20 / 2031 Prospect Water Treatment Plant 39 / 2035 Illawarra/Woronora Water Treatment Plants 40 / 2036 Other Qudos Bank Arena 32 / 2031 New Schools Project 27 / 2032 New Schools Project 2 25 / 2035 New Grafton Correctional Centre 20 / 2040 Sydney International Convention, Exhibition and Entertainment Precinct 25 / 2041 Opera House Car Park 50 / 2043

Note 16 and Note 17


Some arrangements with private sector operators that are not designed, financed and built by the private sector are not in the scope of TPP 06-8. Some of these arrangements, for example where the private sector operates an existing asset of the grantor, are in substance service concession arrangements. These service concession arrangements are accounted for as follows:

Any up-front contributions are classified as other liabilities (if received from the operator) or prepayments (if paid to the operator) and amortised progressively over the concession period as revenue or expenses respectively.

The existing assets of the grantor provided to the operator as service concession assets are recognised where the grantor controls those assets in accordance with the recognition requirements of the applicable Australian Accounting Standards.

Note 17: Income Tax Equivalents

Commercial PNFCs and PFCs, excluding NSW Treasury Corporation (TCorp), are part of a National Tax Equivalent Regime (NTER). TCorp is part of a Tax Equivalent Regime (TER). Although exempt from income tax obligations to the Commonwealth, members of the NTER / TER accrue and pay income tax equivalents to the State and adopt tax effect accounting to maintain competitive neutrality for commercial government entities. The General Government Sector recognises accrued receivables and payables which equate to the amounts accrued by PNFCs and PFCs for income tax equivalents. These amounts are eliminated on consolidation of the Total State Sector.

General Total


Tax Equivalents Receivable 15 32 ... ...Deferred Tax Equivalents Receivable 2,127 2,245 ... ...

Receivable from the PNFC/PFC Sectors 2,143 2,277 ... ...

Tax Equivalents Payable 80 3 ... ...Deferred Tax Equivalents Provision 82 108 ... ...

Payable to the PNFC/PFC Sectors 162 111 ... ...

Note 18 and Note 19


Note 18: Deposits Held

Deposits held represent liabilities for deposits and security deposits held on behalf of entities and individuals external to the State.

Deposits held by Public Financial Corporations are monies deposited with TCorp on an unsecured basis either at call or for fixed terms of one year or less, with interest payable at maturity. Deposits held by Public Financial Corporations are designated at FVTPL at initial recognition as they are managed on a fair value basis in accordance with a documented risk management strategy.

Other deposits held represent liabilities for customer and contractors’ security deposits for utilities such as electricity and water. Customer and contractor deposits can be refunded at any time. Other deposits held are financial liabilities at amortised cost, initially measured at fair value, net of directly attributable transaction costs. Deposits are recognised at no less than the amount payable on demand. Other deposits held are subsequently measured at amortised cost using the effective interest method.

Further information regarding fair value measurement, liquidity risk, including a maturity analysis of the above deposits held, and market risk are disclosed in Note 26: Financial Instruments.

General Total


Current 69 67 144 293Non-current ... ... ... ... 69 67 144 293

Deposits are Held for the Purposes of:

Held by Public Financial Corporations ... ... 55 156 Other 69 67 89 137

69 67 144 293

Note 19: Payables

Payables represent liabilities for goods and services provided to the State. Short-term payables with no stated interest rate are measured at the original invoice amount where the effect of discounting is immaterial.

Payables are initially measured at fair value, net of directly attributable transaction costs. Payables are subsequently measured at amortised cost using the effective interest method.

Further information regarding liquidity risk, including a maturity analysis of the below payables are disclosed in Note 26: Financial Instruments.

General Total


Current 6,913 6,966 8,030 8,244Non-current 118 113 118 113

7,031 7,079 8,148 8,357

Payables Comprise:

Payables Of A Capital Nature 906 1,222 1,117 1,454 Accrued Employee Benefits 900 657 998 734 Interest On Borrowings & Advances 398 308 2 3 Settlement Of Borrowings & Other Financial Instruments ... ... 1 ... Creditors & Other Accruals 4,827 4,892 6,031 6,166 7,031 7,079 8,148 8,357

Note 20


Note 20: Borrowings and Derivative Liabilities at Fair Value

Borrowings at fair value are initially and subsequently measured at fair value with transaction costs recognised in the ‘net operating balance’. Borrowings at fair value primarily consist of domestic and overseas interest-bearing loans and bonds raised by NSW TCorp. These borrowings are designated at FVTPL at initial recognition as they are managed on a fair value basis in accordance with a documented risk management strategy.

Derivative liabilities are classified as held for trading and are measured at FVTPL unless they are designated as effective hedging instruments.

Further information regarding fair value measurement, liquidity risk, including a maturity analysis, and market risk are disclosed in Note 26: Financial Instruments.

General Total


Current 19 11 15,167 9,690Non-current 373 196 83,191 63,067

392 207 98,358 72,757

Borrowings and Derivative Liabilities at Fair Value Comprise: Borrowings at Fair Value Bonds and Other Borrowings Issued by TCorp(a) ... ... 96,970 71,777

... ... 96,970 71,777

Financial Liabilities Held For Trading

Derivative Liabilities 392 207 1,380 977

392 207 1,380 977

Designated And Effective Hedging Instruments Derivative Liabilities ... ... 8 3

... ... 8 3

Total Borrowings and Derivative Liabilities at Fair Value 392 207 98,358 72,757

(a) Bonds and borrowings issued by TCorp have increased throughout 2019-20 primarily to fund infrastructure investment of the State and COVID-19 response and recovery measures.

Note 21


Note 21: Borrowings at Amortised Cost

Borrowings at amortised cost comprise of interest-bearing liabilities including General Government Sector borrowings with TCorp, lease liabilities and other interest-bearing arrangements.

Borrowings classified as financial liabilities at amortised cost are initially recognised at fair value net of directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method.

Lease liabilities are determined in accordance with AASB 16 (2018-19: AASB 117). Refer to Note 28: Leases for further information on leases.

Further information regarding fair value measurement, liquidity risk, including a maturity analysis, and market risk of borrowings at amortised cost are disclosed in Note 26: Financial Instruments.

General Total


Current 3,639 897 1,887 326Non-current 64,246 36,759 13,538 6,825

67,885 37,656 15,425 7,151

Borrowings at Amortised Cost Comprise: Other Borrowings at Amortised Cost(a) 55,821 33,233 35 31 Lease Liabilities(b)(c) 8,437 2,590 11,764 5,287 Financial Liabilities arising from Public Private Partnerships (PPP)(d) 3,627 1,834 3,627 1,834

67,885 37,656 15,425 7,151

(a) Other borrowings at amortised cost for the General Government Sector comprise of borrowings with NSW TCorp. These borrowings have increased throughout 2019-20 primarily to fund infrastructure investment of the General Government Sector and COVID-19 response and recovery measures.

(b) The State continues to recognise finance lease liabilities for several PFPs accounted for in accordance with TPP06-8. Lease liabilities for 2019-20 includes finance lease liabilities recognised for PFP arrangements of $1,352 million for the General Government Sector and $1,994 million for the Total State Sector. Refer to Note 16: Other Non-Financial Assets for recognition and measurement policies applied for PFPs accounted for under TPP06-8.

(c) The 2018-19 balance relates to finance lease liabilities that continue to apply the principles of AASB 117. (d) This also includes a future commitment, to be financed by the private sector, recognised under a PFP for future capital payments on assets

constructed by the private sector in accordance with NSW Treasury Policy TPP06-8.

Note 22


Note 22: Employee Provisions

Wages and Salaries, Annual Leave and Sick Leave

Liabilities for salaries and wages (including non-monetary benefits) and paid sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the service are recognised and measured at the undiscounted amounts expected to be paid when the liabilities are settled.

Annual leave is not expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service. As such, it is required to be measured at present value in accordance with AASB 119 Employee Benefits (AASB 119) (although short-cut methods are permitted).

Unused sick leave does not give rise to a liability. It is not considered probable that sick leave taken will be greater than the benefits accrued in the future.

Consequential costs to employment such as payroll tax, workers compensation insurance premiums and fringe benefits tax are recognised as liabilities and expenses when the employee benefits they relate to are recognised.

Long Service Leave

A liability for long service leave is measured at the present value of future payments anticipated at the reporting date, using the projected unit credit method. An actuary calculates this using:

• expected future wage and salary levels;

• experience of employee departures; and

• periods of service. Estimated future cash outflows are discounted using a discount rate based on the market yield on Commonwealth government bonds as published by the Reserve Bank of Australia, with terms to maturity that match, as closely as possible, the estimated future cash outflow.

A short-hand measurement technique is used as allowed by AASB 119 for leave relating to employees with five and more years of services, where it is not materially different from the present value, as confirmed periodically by an actuary.

Self-Funded Worker’s Compensation

Worker’s compensation insurance is provided by the employer or by the State’s self-insurance scheme, known as the Treasury Managed Fund.

Self-funded workers’ compensation includes liabilities of the Treasury Managed Fund that have been actuarially calculated on a discounted cash flows basis using a ‘central’ estimate assuming a liability discount rate of 0.2 per cent (2018-19: 0.7 to 0.9 per cent) and a future inflation rate of 0.8 to 2.5 per cent (2018-19: 1.6 to 2.5 per cent) and a superimposed inflation rate of 0.1 to 0.7 per cent (2018-19: 0.1 to 0.7 per cent).

In addition to the movement in the discount rate, the movement in the provision has been impacted due to the growth in volume and duration of claims as a result of the NSW bushfire events and COVID-19.

Note 22


General Total



22,566 20,802 23,817 21,969

Employee Provisions Comprise: Long Service Leave 11,833 10,962 12,584 11,677 Annual and Other Leave Entitlements 4,264 3,849 4,584 4,130 Self Funded Worker's Compensation 5,806 5,270 5,915 5,372 Other 663 721 734 790 22,566 20,802 23,817 21,969

Note 23


Note 23: Superannuation Provisions

Superannuation provisions comprise unfunded superannuation liabilities recognised in the State’s defined benefit schemes, in accordance with AASB 119.

The liability, or asset, recognised in the Statement of Financial Position of defined benefit schemes is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets plus the impact of asset ceiling.

The defined benefit obligation is calculated annually by independent actuaries (Mercer Consulting (Australia) Pty Ltd) using the projected unit credit method. The liability is assessed using the latest triennial review of actuarial economic and demographic assumptions and subsequent economic and market forecasts. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using the 10-year Commonwealth government bond rate as at 30 June.

The present value of the defined benefit obligation is based on future payments arising from service of current and past scheme members up to the reporting date. It is calculated using expected future wage and salary levels, expected future inflation levels as per the growth rate in the Consumer Price Index, superannuation contribution tax, and the experience of employee departures and their periods of service.

Net interest expense is calculated by applying the discount rate to the net defined benefit liability or asset. Net interest and other expenses related to the defined benefit plans are recognised in ‘expenses from transactions’.

Actuarial gains and losses resulting from changes in measurement assumptions, the return on plan assets in excess of the government bond rate and any change in the effect of the asset ceiling are recognised as re-measurements as part of ‘Other Economic Flows – Other Comprehensive Income’.

Refer to Note 3: Expenses for information on net interest expense and refer to the Other Economic Flows – Other Comprehensive Income in the Statement of Comprehensive Income for information on actuarial gain and losses.

Net Liability recognised on Statement of Financial Position

General Total


Current 99 1,735 99 1,740Non-current 67,791 65,961 70,852 68,970Total 67,890 67,696 70,951 70,711

Note 23


State Public Sector Superannuation Schemes

The State public sector superannuation liability comprises the following schemes:

State Sector Schemes(a)(d):

– State Authorities Superannuation Scheme (SASS)

– State Authorities Non-Contributory Superannuation Scheme (SANCS)

– State Superannuation Scheme (SSS)

– Police Superannuation Scheme (PSS)

Parliamentary Contributory Superannuation Scheme (PCSS)(b)(d)

Judges’ Pension Scheme (JPS)(c)(d)

Energy Industries Superannuation Schemes (EISS)(e) (a) These Schemes are established and governed by the following NSW legislation: Superannuation Act 1916, State Authorities

Superannuation Act 1987, Police Regulation (Superannuation) Act 1906, State Authorities Non-Contributory Superannuation Act 1987, and their associated regulations. The SAS Trustee Corporation (STC) is responsible for the governance of the State Sector Schemes.

(b) The Parliamentary Contributory Superannuation Scheme (PCSS) was established by and is governed by the Parliamentary Contributory Superannuation Act 1971 and its associated regulations. The PCSS trustee is a statutory body comprising of two trustees from the Legislative Council, five trustees from the Legislative Assembly, and the Treasury Secretary (or Treasury official appointed in their absence).

(c) Judges’ Pension Scheme (JPS), was established by and is governed by Judges’ Pensions Act 1953 No 41. JPS does not have a trustee. (d) The State Sector Schemes, PCSS and JPS are exempt public sector superannuation schemes under the Superannuation Industry

(Supervision) Act 1993 (Cth) (the SIS Act). The SIS Act treats exempt public sector superannuation funds as complying funds for concessional taxation and superannuation guarantee purposes.

(e) EISS was established on 30 June 1997 by a Trust Deed made under an Act of the NSW Parliament, for the purpose of providing retirement benefits for employees from certain energy industries bodies in New South Wales. EISS is regulated primarily by the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act), but is also subject to regulation under the Superannuation Administration Act 1996 (NSW). The Energy Industries Superannuation Scheme Pty Limited, as trustee, is responsible for the governance of the EISS.

These schemes are all defined benefit schemes, whereby at least a part of the final benefit is derived from a multiple of member salary and years of membership. Members receive lump sum or pension benefits on retirement, death, disablement and withdrawal. Except for JPS, all of the above schemes are closed to new entrants.

The NSW Government:

ensures that the State Sector Schemes and PCSS conform to the principles of the Commonwealth’s retirement incomes policy relating to preservation, vesting and reporting to members and that member benefits are adequately protected.

prudentially monitors and audits the State Sector Schemes and PCSS and the activities of each of the Trustees in a manner consistent with the prudential controls of the SIS Act. These activities are in addition to other legislative obligations on the Trustees.

remains committed to fully funding its superannuation liabilities and is reviewing the timing of contributions to achieve full funding. Reprofiling the Government’s contributions to the State’s defined benefits superannuation schemes is one of the fiscal repair initiatives being undertaken by the Government to respond to the unprecedented pressure on Government Finances as a result of the COVID-19 pandemic. The Fiscal Responsibility Act 2012 includes a fiscal target to fully fund the State’s superannuation liabilities by 2030 – this fiscal repair initiative will require amendment to the Act committed under the Fiscal Responsibility Act 2012 to fully fund the State Sector Schemes.

The Trustees of the schemes:

have a legal obligation to act solely in the best interests of fund beneficiaries.

are responsible for administration of the fund and payment to the beneficiaries in accordance with the fund rules.

are responsible for the management and investment of the fund assets.

are responsible for compliance with other applicable regulations; and compliance with the Trust Deeds (EISS).

Note 23


Regulatory Framework

The Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act) governs the superannuation industry and provides the framework within which superannuation plans operate. The SIS Regulations require an actuarial valuation to be performed for each defined benefit superannuation plan every three years, or every year if the plan pays defined benefit pensions, unless an exemption has been obtained. The State Sector Schemes, PCSS and JPS have an actuarial investigation performed every three years, with the last actuarial investigation performed at 30 June 2018 for the State Sector Schemes, at 30 June 2017 for PCSS, and at 1 January 2018 for JPS. EISS received an exemption from annual actuarial valuation and thus actuarial valuations are only required triennially. The last actuarial valuation of the Scheme was performed as at 30 June 2018.

Scheme Member Numbers

Scheme membership numbers are as follows:

General Government Sector Member Numbers ------------------ NSW Public Sector Superannuation Schemes ------------------

SASS SANCS SSS PSS PCSS JPS EISS

For the 2019-20 Financial Year Contributors 13,627 15,691 1,427 637 14 129 ... Deferred Benefits 9,052 9,711 568 20 3 ... 18 Pensioners 3,539 ... 47,155 6,709 267 233 585 Pensions Fully Commuted ... ... 13,520 ... ... ... ...

For the 2018-19 Financial Year Contributors 15,158 17,847 1,915 775 14 129 ... Deferred Benefits 9,347 11,016 650 24 2 ... 19 Pensioners 3,483 ... 47,383 6,664 277 233 584 Pensions Fully Commuted ... ... 13,655 ... ... ... ...

Total State Sector Member Numbers ------------------ NSW Public Sector Superannuation Schemes ------------------

SASS SANCS SSS PSS PCSS JPS EISS

For the 2019-20 Financial Year Contributors 15,463 17,624 1,524 637 14 129 306 Deferred Benefits 9,052 9,711 621 20 3 ... 19 Pensioners 4,483 ... 49,405 6,709 267 233 695 Pensions Fully Commuted ... ... 14,499 ... ... ... ...

For the 2018-19 Financial Year Contributors 17,195 20,006 2,037 775 14 129 336 Deferred Benefits 9,347 11,016 712 24 2 ... 20 Pensioners 4,379 ... 49,646 6,664 277 233 692 Pensions Fully Commuted ... ... 14,646 ... ... ... ...

Note 23


Net Liability Recognised in the Statement of Financial Position

The net liability recognised in the Statement of Financial Position comprises the following Scheme net defined benefit obligation balances.

General Total


SASS Present Value of Defined Benefit Obligation 15,226 15,281 17,853 17,996 Plan Assets (9,753) (10,054) (11,177) (11,572) Impact of Asset Ceiling 17 17 18 17Net Liability 5,491 5,243 6,693 6,441

SANCS Present Value of Defined Benefit Obligation 2,355 2,434 2,563 2,649 Plan Assets (1,535) (1,682) (1,632) (1,783) Impact of Asset Ceiling 0 0 0 0Net Liability 820 752 931 866

SSS Present Value of Defined Benefit Obligation 64,193 65,393 67,264 68,503 Plan Assets (20,381) (21,125) (21,850) (22,661) Impact of Asset Ceiling 0 0 21 19Net Liability 43,812 44,268 45,435 45,861

PSS Present Value of Defined Benefit Obligation 20,241 20,187 20,241 20,187 Plan Assets (5,036) (5,113) (5,036) (5,113)

Net Liability 15,205 15,074 15,205 15,074

PCSS Present Value of Defined Benefit Obligation 1,009 980 1,009 980 Plan Assets (328) (336) (328) (336)

Net Liability 681 643 681 643

JPS Present Value of Defined Benefit Obligation 1,601 1,455 1,601 1,455

Net Liability 1,601 1,455 1,601 1,455

EISS Present Value of Defined Benefit Obligation 732 744 1,130 1,146 Plan Assets (452) (484) (726) (777)Net Liability 280 260 404 369

Total

Present Value of Defined Benefit Obligation(a) 105,357 106,474 111,662 112,916 Plan Assets (37,484) (38,795) (40,749) (42,242) Impact of Asset Ceiling(b) 17 17 39 37Total Net Liability 67,890 67,696 70,951 70,711

(a) The defined benefit obligation includes a contribution tax provision. This is calculated based on grossing up the deficit less the allowance for past service expenses and insurable death and disability liabilities at a contribution tax rate of 15%. The PCSS assets and defined benefit obligation are based on 2020 data (2019: from 2018 data). The JPS defined benefit obligation is projected from 2018 data (2019: from 2018 data).

(b) The Future Service Liability (FSL) used to determine if an asset ceiling limit should be imposed does not have to be recognised by the State in accordance with AASB 119.

The increase in net liabilities over the 12 months to 30 June 2020 of $194 million (2018-19: $13.5 billion) for the General Government Sector and $240 million (2018-19: $14.3 billion) for the Total State Sector is largely as a result of the decrease in the liability discount rate for the State Sector Schemes and EISS from 1.32 per cent to 0.87 per cent (2018-19: decrease from 2.65 per cent to 1.32 per cent).

Note 23


Reconciliation of the Net Defined Benefit Obligation

The movements in the net defined benefit obligation over the year are as follows:


Present Value of

Obligation

Fair Value of Plan Assets Total

Impact of Asset

Ceiling Total Net Liability

$m $m $m $m $m

Balance at 1 July 2019 106,474 (38,795) 67,679 17 67,696

Current Service Cost 400 ... 400 ... 400

Net Interest Expense (Interest Expense/(Income)) 1,376 (494) 882 0 882

Superannuation Interest Cost - Expenses from Transactions 1,777 (494) 1,283 0 1,283

Remeasurements: Actual Return on Fund Assets Excluding Interest Income ... (346) (346) ... (346)

Actuarial (Gains)/Losses Arising from Changes in Demographic Assumptions (0) ... (0) ... (0)

Actuarial (Gains)/Losses Arising from Changes in Financial Assumptions 1,204 ... 1,204 ... 1,204

Actuarial (Gains)/Losses Arising from Liability Experience (185) ... (185) ... (185)

Change in Asset Ceiling Excluding Interest Expense ... ... ... 0 0

Superannuation Recognised in Other Economic Flows - Other Comprehensive Income 1,019 (346) 673 0 673

(Gains)/Losses Arising from Settlements (0) ... (0) ... (0)

Contributions: Employer Contributions ... (1,761) (1,761) ... (1,761)

Contributions by Participants 144 (144) ... ... ...

Payments: Benefits Paid (3,914) 3,914 ... ... ...

Taxes, Premiums & Expenses Paid (142) 142 ... ... ...

Effects of Transfers In/Out Due to Business Combinations and Disposals (2) ... (2) ... (2)

Balance at 30 June 2020 105,357 (37,484) 67,873 17 67,890

Present Value of

Obligation


Impact of Asset


$m $m $m $m $m

Balance at 1 July 2018 92,591 (38,406) 54,185 16 54,200


Net Interest Expense (Interest Expense/(Income)) 2,394 (982) 1,411 0 1,412


Remeasurements: Actual Return on Fund Assets Excluding Interest Income ... (2,067) (2,067) ... (2,067)

Actuarial (Gains)/Losses Arising from Changes in Demographic Assumptions 17 ... 17 ... 17



Change in Asset Ceiling Excluding Interest Expense ... ... ... 1 1Superannuation Recognised in Other Economic Flows - Other Comprehensive Income 15,430 (2,067) 13,363 1 13,364

(Gains)/Losses Arising from Settlements (9) ... (9) ... (9)

Contributions: Employer Contributions ... (1,681) (1,681) ... (1,681)



Taxes, Premiums & Expenses Paid 100 (100) ... ... ...Effects of Transfers In/Out Due to Business Combinations and Disposals (1) ... (1) ... (1)

Balance at 30 June 2019 106,474 (38,795) 67,679 17 67,696

Note 23


Total State Sector

Present Value of

Obligation


Impact of Asset


$m $m $m $m $m

Balance at 1 July 2019 112,915 (42,242) 70,673 37 70,711


Net Interest Expense (Interest Expense/(Income)) 1,465 (538) 927 0 927


Remeasurements: Actual Return on Fund Assets Excluding Interest Income ... (374) (374) ... (374)

Actuarial (Gains)/Losses Arising from Changes in Demographic Assumptions (0) ... (0) ... (0)



Change in Asset Ceiling Excluding Interest Expense ... ... ... 2 2Superannuation Recognised in Other Economic Flows - Other Comprehensive Income 1,063 (374) 688 2 690

(Gains)/Losses Arising from Settlements (7) 6 (1) ... (1)

Contributions: Employer Contributions ... (1,810) (1,810) (1,810)



Taxes, Premiums & Expenses Paid (157) 157 ... ... ...Effects of Transfers In/Out Due to Business Combinations and Disposals (2) ... (2) ... (2)

Balance at 30 June 2020 111,662 (40,749) 70,912 39 70,951

Present Value of

Obligation


Impact of Asset


$m $m $m $m $m

Balance at 1 July 2018 98,154 (41,772) 56,382 38 56,421


Net Interest Expense (Interest Expense/(Income)) 2,535 (1,068) 1,467 (1) 1,466

Superannuation Interest Cost - Expenses from Transactions 2,980 (1,068) 1,912 (1) 1,911

Remeasurements: Actual Return on Fund Assets Excluding Interest Income ... (2,252) (2,252) ... (2,252)

Actuarial (Gains)/Losses Arising from Changes in Demographic Assumptions 19 ... 19 ... 19



Change in Asset Ceiling Excluding Interest Expense ... ... ... ... ...Superannuation Recognised in Other Economic Flows - Other Comprehensive Income 16,372 (2,252) 14,120 ... 14,120

(Gains)/Losses Arising from Settlements (22) 11 (11) ... (11)

Contributions: Employer Contributions ... (1,734) (1,734) (1,734)



Taxes, Premiums & Expenses Paid 110 (110) ... ... ...

Effects of Transfers In/Out Due to Business Combinations and Disposals 4 ... 4 ... 4

Balance at 30 June 2019 112,915 (42,242) 70,673 37 70,711

Note 23


Significant Actuarial Assumptions

The significant defined benefit liability actuarial assumptions at the reporting dates are as per the following table.

principal assumptions at the reporting dates are as per the following table.

At 30 June 2020 At 30 June 2019

Significant Actuarial Assumptions State Super

Schemes, JPS, PCSS EISS State Super Schemes, JPS, PCSS EISS

Discount Rate 0.87% pa 0.87% pa 1.32% pa 1.32% pa CPI Growth Rate 1.00% pa(a) 1.00% pa(a) 1.75% pa 1.75% pa Salary Growth Rate 3.20% pa 2.20% pa(b) 3.20% pa 2.50% pa

Pensioner Mortality Rate

As per the 30 June 2018 triennial valuation for State Super Schemes, as per 1 January 2018 triennial valuation for JPS, as per 2017 triennial actuarial valuation for PCSS, as per

2018 triennial actuarial valuation for EISS

As per the 30 June 2018 triennial valuation for State Super Schemes, as per 1 January 2018 triennial valuation for JPS, as per 2017 triennial actuarial valuation for PCSS, as per

2018 triennial actuarial valuation for EISS

(a) Rate of CPI increase for State Super Funds Schemes and EISS in forward years are: 0.25% for 2020-21; 1.50% for 2021-22; 1.25% for 2022-23; 1.75% for 2023-24; 2.00% for 2024-25 and 2025-26; 2.25% pa to 2029-30; 2.50% pa thereafter.

(b) Salary increase rate (excluding promotional increases) for EISS is for Essential Energy only. Salary increase rate until 30 June 2021 is 2.20%; then 2.50% pa thereafter.

Sensitivity Analysis

There is increased volatility in terms of expected outcomes, especially in the short to medium term, in the current environment due to COVID-19. Information on sensitivities provides a guide to how this could affect the defined benefit obligation.

The State’s total defined benefit obligation is presented below under several scenarios. The total defined benefit obligation disclosed is inclusive of the contribution tax provision which is calculated based on the asset level at 30 June 2020.

Scenarios A to F relate to sensitivity of the total defined benefit obligation to economic assumptions, and scenarios G and H relate to sensitivity to demographic assumptions.

30 June 2020 Base Case

Scenario A

Scenario B

Scenario C

Scenario D

Scenario E

Scenario F

Scenario G

Scenario H

-0.5%

Discount Rate

+0.5% Discount

Rate

+0.5% rate of

CPI increase

-0.5% rate of

CPI increase

+0.5% Salary

Increase Rate

-0.5% Salary

Increase Rate

Lower Pensioner Mortality

Rates

Higher Pensioner Mortality

Rates

$m $m $m $m $m $m $m $m $m

Defined Benefit Obligation Value State Sector Schemes(a) 107,920 115,821 100,843 115,364 101,183 108,312 107,540 109,970 106,649 EISS(b) 1,130 1,196 1,069 1,187 1,078 1,142 1,119 1,145 1,118 JPS(c)(d) 1,601 1,701 1,488 - - 1,721 1,473 1,669 1,522 PCSS(c)(d) 1,009 1,109 924 - - 1,103 925 1,044 973

(a) For State Sector Schemes and EISS, the lower pensioner mortality rate sensitivity assumes that State Sector Scheme (EISS) short term pensioner mortality improvement factors continue into the long term after 2023 (EISS: 2024). The higher pensioner mortality rate sensitivity assumes that State Sector Scheme (EISS) long term pensioner mortality improvement factors for years post 2023 (EISS: 2024) are also applicable for years in the short term.

(b) For EISS, the lower mortality demographic assumption sensitivity assumes that the short term pensioner mortality improvement factors for years 2018 to 2024 also apply for years after 2024. The higher mortality demographic assumption sensitivity assumes that long term pensioner mortality improvement factors for years post 2024 also apply for years 2018 to 2024.

(c) For JPS and PCSS, the lower pensioner mortality sensitivity assumes a 10 per cent decrease in pensioner mortality rates. The higher pensioner mortality sensitivity assumes a 10 per cent increase in pensioner mortality rates.

(d) CPI sensitivity analysis information is not available for these funds.

Note 23


30 June 2019 Base Case

Scenario A

Scenario B

Scenario C

Scenario D

Scenario E

Scenario F

Scenario G

Scenario H

-1.0%

Discount Rate

+1.0% Discount

Rate

+0.5% rate of

CPI increase

-0.5% rate of

CPI increase

+0.5% Salary

Increase Rate

-0.5% Salary

Increase Rate

Lower Pensioner Mortality

Rates

Higher Pensioner Mortality

Rates

$m $m $m $m $m $m $m $m $m

Defined Benefit Obligation Value State Sector Schemes(a) 109,334 126,290 95,569 116,773 102,419 109,680 108,810 111,167 108,009 EISS(b) 1,146 1,291 1,026 1,207 1,090 1,157 1,136 1,161 1,134 JPS(c)(d) 1,455 1,646 1,267 - - 1,562 1,337 1,515 1,381 PCSS(c)(d) 980 1,182 824 - - 1,071 898 1,013 946

(e) For State Sector Schemes and EISS, the lower pensioner mortality rate sensitivity assumes that State Sector Scheme (EISS) short term pensioner mortality improvement factors continue into the long term after 2023 (EISS: 2024). The higher pensioner mortality rate sensitivity assumes that State Sector Scheme (EISS) long term pensioner mortality improvement factors for years post 2023 (EISS: 2024) are also applicable for years in the short term.

(f) For EISS, the lower mortality demographic assumption sensitivity assumes that the short term pensioner mortality improvement factors for years 2018 to 2024 also apply for years after 2024). The higher mortality demographic assumption sensitivity assumes that long term pensioner mortality improvement factors for years post 2024) also apply for years 2018 to 2024).

(g) For JPS and PCSS, the lower pensioner mortality sensitivity assumes a 10 per cent decrease in pensioner mortality rates. The higher pensioner mortality sensitivity assumes a 10 per cent increase in pensioner mortality rates.

(h) CPI sensitivity analysis information is not available for these funds.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit net liability recognised in the Statement of Financial Position.

Fair Value of Fund Assets

The major categories of plan assets for the State Sector Schemes are as follows:

2019-20 2018-19 Asset Category Quoted Unquoted Total in % Quoted Unquoted Total in % $m $m $m $m $m $m

Short Term Securities 1,890 2,207 4,097 10.2% 2,136 1,907 4,042 9.6%

Australian Fixed Interest ... 1,066 1,066 2.7% 5 2,290 2,295 5.4%

International Fixed Interest 30 1,879 1,909 4.8% 7 1,961 1,968 4.7%

Australian Equities 6,902 392 7,294 18.1% 7,818 551 8,369 19.8%

International Equities 11,487 463 11,950 29.7% 8,795 2,592 11,387 27.0%

Property 645 2,708 3,352 8.3% 699 2,890 3,588 8.5%

Alternatives 23 10,499 10,523 26.2% 327 10,231 10,558 25.0%

Total(a) 20,977 19,215 40,192 100.0% 19,787 22,421 42,208 100.0%

(a) Additional to the assets disclosed above, at 30 June 2020 the State Sector Schemes Pooled Fund has provisions for receivables / (payables) estimated to be around $1.69 billion (2018-19: $1.63 billion). This gives total estimated assets of $41.88 billion (2018-19: $43.84 billion). The total includes assets for schemes outside NSW government.

The State Sector Schemes’ assets are invested at arm’s length through independent fund managers and have a diversified asset mix. The assets of the State Sector Schemes are pooled together in the Pooled Fund and are not separately invested for each scheme. It is therefore not possible or appropriate to disaggregate and attribute fund assets to individual schemes. The fair value of the Pooled Fund assets as at 30 June 2020 includes $36.9 million (2019: $100 million) in NSW government bonds.

Of the direct properties owned by the Pooled Fund:

SAS Trustee Corporation occupies part of a property 100% owned by the Pooled Fund with a fair value of $340 million (30 June 2019: $316 million).

Health Administration Corporation occupies part of a property 50% owned by the Pooled Fund with a fair value of $343 million (30 June 2019: $331 million).

Note 23


The major categories of plan assets for EISS are as follows:

2019-20 2018-19 Asset Category Quoted Unquoted Total in % Quoted Unquoted Total in % $m $m $m $m $m $m

Australian Equities ... 262 262 14.3% ... 329 329 16.0%

International Equities ... 464 464 25.3% ... 515 515 25.0%

Property ... 235 235 12.8% ... 226 226 11.0%

Private Equity ... 17 17 0.9% ... 41 41 2.0%

Infrastructure ... 139 139 7.6% ... 123 123 6.0%

Alternatives ... 147 147 8.0% ... 82 82 4.0%

Fixed Income ... 332 332 18.1% ... 638 638 31.0%

Cash ... 239 239 13.0% ... 103 103 5.0%

Total ... 1,835 1,835 100.0% ... 2,058 2,058 100.0%

The fair value of EISS Scheme plan assets includes no amounts relating to any of the State’s own financial instruments, or any property occupied by, or other assets used by, the State.

There are no assets in the JPS. The State makes regular contributions to meet the scheme’s obligations. For PCSS the asset categories split was not available at 30 June 2020.

Description of the Risks Arising from the Schemes

There are a number of risks arising from the schemes. The more significant risks are:

Risk Description

Investment risk The risk that investment returns will be lower than assumed and the employer will need to increase contributions to offset this shortfall.

Longevity risk The risk that pensioners live longer than assumed, increasing future pensions.

Pension indexation risk The risk that pensions will increase at a rate greater than assumed, increasing future pensions.

Salary growth risk The risk that wages or salaries (on which future benefit amounts for active members will be based) will rise more rapidly than assumed, increasing defined benefit amounts and thereby requiring additional employer contributions.

Legislative risk The risk is that legislative changes could be made which increase the cost of providing the defined benefits.

The major potential for volatility arises from movements in the fair value of plan assets and the risk-free rate which is used to discount defined benefit obligations.

Plan assets are invested with independent fund managers and have a diversified asset mix. The Schemes do not have significant concentrations of investment risk or liquidity risk.

For State Sector Schemes, the Trustee monitors asset-liability risk continuously in setting its investment strategy. It also monitors cashflows to manage liquidity requirements. No explicit asset-liability matching strategy is used by the Trustee.

Derivative instruments may be used by investment managers in the management of the portfolio but must not be used for speculative purposes, investment portfolio gearing or to create net short positions.

Note 23


AASB 1056 Valuation

The following is a summary of the 30 June financial position of the fund calculated in accordance with AASB 1056 Superannuation Entities.

General Total


Accrued Benefits 52,216 52,019 55,625 55,471Net Market Value of Fund assets (37,484) (38,795) (40,749) (42,242)Net (Surplus)/Deficit 14,731 13,225 14,875 13,228

The primary difference between the net deficit calculated in accordance with AASB 1056 compared with AASB 119 (and brought to account in the TSSA’s Consolidated Statement of Financial Position) is that the accrued benefits discount rate is based on the more volatile and currently significantly lower 30 June long-term Commonwealth government bond rate for the AASB 119 calculation, whereas the AASB 1056 calculation uses a less volatile long term earnings rate. As the current long term earning rate exceeds the Commonwealth government bond rate by a large margin, liabilities valued under AASB 1056 are significantly lower than liabilities valued under AASB 119.

Economic assumptions adopted for the 30 June 2020 AASB 1056 valuation are as follows:

At 30 June 2020 At 30 June 2019

Pooled Fund EISS Pooled Fund EISS Expected Rate of Return on Assets Backing Current Pension Liabilities 7.00% pa 5.00% pa 7.40% pa 5.50% paExpected Rate of Return on Assets Backing Other Liabilities 6.00% pa 5.00% pa 6.40% pa 5.50% paExpected Salary Increase Rate 3.20% pa 2.30% pa(a) 3.20% pa 2.60% paExpected Rate of CPI Increase 2.00% pa 1.90% pa 2.20% pa 2.30% pa

(a) EISS (for Essential Energy only) salary increase rate until 30 June 2021 is 2.30% pa; 2.40% for 2021-22; 2.50% for 2022-23; then 2.90% pa thereafter.

Separate sensitivities are not included for the AASB 1056 measurement of the accrued benefits. However, the assumptions for CPI, salary and demographics are broadly the same under both AASB 119 and AASB 1056. Whilst the underlying liability amounts for AASB 1056 are lower than for AASB 119, the sensitivity of results under AASB 119 gives an indication to the directional and proportional impact of the changes in these assumptions.

The one assumption that differs substantially under the two standards is the expected rate of return on the fund assets (discount rate). Due to this variation and the potential for material variation in the rate of return on fund assets in current financial conditions, the sensitivities to this assumption for the AASB 1056 measured accrued benefits is provide in the tables below.

30 June 2020 Base Case Scenario A Scenario B -0.5%

Discount Rate +0.5%

Discount Rate $m $m $m

Defined Benefit Obligation Value State Sector Schemes 53,702 55,766 51,793 EISS 704 736 675 JPS 783 834 735 PCSS 435 460 412

30 June 2019 Base Case Scenario A Scenario B -0.5%

Discount Rate +0.5%

Discount Rate $m $m $m

Defined Benefit Obligation Value State Sector Schemes 53,571 55,636 51,662 EISS 719 750 688 JPS 755 804 708 PCSS 426 450 404

Note 23


Funding Levels

Funding arrangements are reviewed at least every three years following the release of the triennial actuarial review. Funding positions are reviewed annually, and funding arrangements may be adjusted as required after each annual review. Contribution rates are set after discussions between the employer, Trustees and the State.

The State makes regular contributions for the JPS to meet the scheme’s obligations as it holds no assets.

The method used to determine the employer contribution recommendations at last actuarial review was the Aggregate Funding method. The method adopted affects the timing of the costs to the State. Employer contributions rates are determined so that sufficient assets will be available to meet benefit payments to existing members, taking into account the current value of assets, future contributions and the maturity profile of the funds.

The table below summarises the expected contributions to each plan for the next annual reporting period and the maturity profile of the defined benefit obligation of the plans.

Expected Maturity Recommended Contribution Rates Contributions Profile 2019-20(a) 2018-19(b) 2019-20 2018-19 $m $m Years Years

SASS 60 328 14.0 12.4 multiple of member contributions SANCS 18 68 14.0 12.4 % member salary SSS 2 1,016 14.0 12.4 multiple of member contributions PSS ... 331 14.0 12.4 % of member salary PCSS 12 16 17.0 17.0 multiple of member contributions JPS 52 50 14.0 14.0 % member salary EISS 4 5 12.8 11.8 multiple of member contributions / % of member salary

(a) Represents expected contributions to the financial year ending 30 June 2021. (b) Represents expected contributions to the financial year ending 30 June 2020.

The NSW Government’s commitment under the Fiscal Responsibility Act 2012 to fully fund the State Sector Schemes, is measured in accordance with AASB 1056.

Note 24


Note 24: Other Provisions

Other Provisions

Other provisions exist when:

• the State has a present legal or constructive obligation as a result of a past event;

• it is probable that an outflow of resources will be required to settle the obligation; and

• a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the unwinding of the discount rate in the current period is recognised as interest expense in ‘Expenses from Transactions’. The impact of any discount rate changes on the provisions at the end of the period, due to the revaluation of future liabilities, is recognised in ‘Other Economic Flows’.

In regard to outstanding claims, the liabilities are measured as the present value of the expected future payments, including claims incurred but not yet reported, and the anticipated fund management fees. Expected future payments are estimated on the basis of the ultimate cost of settling claims.

The amount and timing of the actual outflows in relation to the above provisions have a degree of uncertainty. Actual results may depend on a number of factors specific to the type of claim, for example, future economic and environmental conditions may be different to those assumed.

Actuarial gains and losses resulting from changes in measurement assumptions are recognised as part of ‘Other Economic Flows – included in the Operating Result’. The other components of the expense are recognised in ‘expenses from transactions’.

General Total


Current 3,743 2,890 4,119 3,295Non-current 10,358 8,715 17,667 14,890 14,101 11,604 21,786 18,185

Other Provisions Comprise: Outstanding Claims: Self Insurance Corporation (Excluding Self Funded Worker's Compensation)(a) 6,011 4,102 6,011 4,102 Workers' Compensation (Dust Diseases) 2,084 1,949 2,084 1,949 Lifetime Care And Support Scheme ... ... 7,354 6,186 State Insurance Regulatory Authority 290 258 290 258Long Service Corporation Schemes 1,662 1,458 1,662 1,458HIH Loss Compensation 4 7 4 7Victims Support Fund 193 135 193 135NSW Share of University Superannuation 1,381 1,442 1,381 1,442Provision for Land Remediation, Restoration Costs and Other Claims 2,477 2,253 2,808 2,647

14,101 11,604 21,786 18,185

Insurance Recoveries Receivable Include those Accrued by: Self Insurance Corporation - for Reinsurance and Other Recoveries Receivable 303 251 303 251Workers' Compensation (Dust Diseases) Authority - Insurance Levies Accrued 805 615 805 615 1,107 866 1,107 866

(a) The increase in the provision for outstanding claims liabilities included in Self Insurance Corporation provisions is due to the inclusion of losses related to the NSW bushfire events, the impact of COVID-19 and the inclusion of sensitive claims relating to historical abuse for the first time on the NSW Treasury Managed Fund (TMF) self insurance scheme.

Note 24


• The provision for Self Insurance Corporation (excluding self-funded worker’s compensation) exists to provide self-insurance coverage for general government agencies and state-owned corporations under the NSW Self Insurance Corporation Act 2004. The liabilities for these outstanding claims are measured as the present value of the expected future payments. The expected future payments are estimated on the basis of the ultimate cost of settling claims, which is affected by factors such as normal inflation and ‘superimposed inflation’ (refers to inflation above normal inflation, including factors such as trends in court awards). This provision is actuarially assessed in consultation with the claims managers of ‘NSW Self Insurance Corporation’ (SICorp) at each 30 June. The discount rate used is based on Commonwealth government bond yields. The provision comprises outstanding claims from the:

– NSW Treasury Managed Fund (TMF). This is a self-insurance scheme which protects the insurable assets and exposures of all public hospitals, all public sector agencies that are financially dependent on the Consolidated Fund, and various other statutory authorities.

– Pre-Managed Fund Reserve (PMF). This is used to fund claims incurred by the NSW Government, prior to 1 July 1989, which were previously in the Fire Risks Account, the Fidelity Fund and the Public Liability Fund.

– Governmental Workers Compensation Account (GWC). This is used to fund outstanding workers compensation claims liabilities as at 30 June 1989.

– Transport Accidents Compensation Fund (TAC). This is used to fund motor transport accident claims until 30 June 1987 and TransCover system claims costs from 1 July 1987 to 30 June 1989. This was replaced as of 1 July 1989 by the Motor Accidents Scheme.

Key actuarial assumptions adopted for the provision for outstanding claims in SICorp (excluding worker’s compensation) are:

TMF GWC TAC 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19

% % % % % %

Not Later Than One Year Inflation Rate 0.70 - 1.37 1.72 - 2.88 1.05 2.33 - 2.58 0.83 - 1.37 2.32 - 2.88Discount Rate 0.18 - 0.28 0.92 - 1.09 0.23 1.00 0.18 - 0.28 0.92 - 1.09Superimposed Inflation(a) 1.50 - 3.00 1.50 - 2.50 0.00 - 1.75 0.00 - 1.75 3.50 3.50Later Than One Year Inflation Rate 0.50 - 3.50 0.30 - 3.50 0.58 - 3.50 0.85 - 3.50 0.50 - 3.50 1.30 - 3.50Discount Rate 0.25 - 4.50 0.89 - 4.50 0.26 - 4.50 0.90 - 4.50 0.25 - 4.50 0.89 - 4.50Superimposed Inflation(a) 1.50 - 3.00 1.50 - 2.50 0.00 - 1.75 0.00 - 1.75 3.50 3.50

(a) Dependent on payment type.

• The provision for Workers’ Compensation (Dust Diseases) covers claims to workers in New South Wales who develop a dust disease from occupational exposure to dust. The Workers’ Compensation (Dust Diseases) Authority provides a no-fault compensation scheme to victims under the Workers’ Compensation (Dust Diseases) Act 1942. As at 30 June 2020, this liability was actuarially assessed by the agencies’ consulting actuaries.

• The provision for Lifetime Care and Support covers the care and support services for persons catastrophically injured from motor accidents in New South Wales, regardless of who was at fault in the accident, as per the Motor Accidents (Lifetime Care and Support) Act 2006. As at 30 June 2020, this liability was actuarially assessed by the agencies’ consulting actuaries.

• The provision for State Insurance Regulatory Authority (previously WorkCover Authority) covers claims assumed by the State from some failed insurance companies. The liabilities cover claims incurred but not yet paid, incurred but not yet reported and the anticipated fund management fees in respect of the management of those claims. As at 30 June 2020, liabilities for compensation payments and estimated compensation for future claims were actuarially assessed by the agencies’ consulting actuaries.

Note 24


• The provision for Long Service Corporation Schemes include the provisions for long service leave levies to be paid under the Building and Construction Industry Long Service Payments Act 1986 and the Contract Cleaning Industry (Portable Long Service Leave Scheme) Act 2010. As at 30 June 2020, this liability was actuarially assessed by the agencies’ consulting actuaries.

• A provision for loss compensation associated with the former HIH Insurance Limited has been raised by the State for building warranty insurance and for motor vehicle claims. As at 30 June 2020, these liabilities were actuarially assessed by the agencies’ consulting actuaries.

• A provision exists for the Victims’ Support Scheme (VSS), which was created on 3 June 2013 through legislation known as the Victims’ Rights and Support Act 2013. This Act replaced the Victims’ Compensation Scheme (VCS), legislated through the Victims’ Support and Rehabilitation Act 1996, and was closed to new applications for support on 7 May 2013. The VSS provides victims of violent crime, upon application after 7 May 2013 and within an eligibility period of 2 to 10 years from the date of the occurrence of a violent act of crime, support in the form counselling services, financial assistance and recognition payments. Violent acts can include assault, sexual assault, child sexual assault, domestic violence, robbery, homicide and other eligible violent acts. The Department of Justice has obtained actuarial advice from an independent actuary to determine a liability provision as at 30 June 2020 in respect to Lodged But Unresolved Claims. However, the amount attributable for Incurred But Not Reported (IBNR) claims are unable to be reliably estimated by the actuary due to a range of key uncertainties (refer to Note 30: Contingent Assets and Contingent Liabilities).

• A provision for universities superannuation has been recognised for the funding of staff from NSW universities who are members of State Super’s defined benefit schemes (SASS, SANCS and SSS). As at 30 June 2020, this liability for universities superannuation was actuarially assessed by the agencies consulting actuaries.

Key actuarial assumptions adopted for other Schemes are as follows:

Scheme Discount Rate % Inflation Rate %

2019-20 2018-19 2019-20 2018-19

Claims expected to be paid not later than one year Workers' Compensation (Dust Diseases) 0.23 1.00 1.05 2.33Lifetime Care and Support 0.18 - 0.28 0.92 - 1.09 0.83 - 1.37 2.22 - 2.48State Insurance Regulatory Authority 0.22 0.93 0.60 2.38Building and Construction Industry Long Service Payment Scheme 0.90 1.40 3.00 3.00HIH Loss Compensation 0.19 1.04 0.83 1.83

Claims expected to be paid later than one year Workers' Compensation (Dust Diseases) 1.71 1.90 1.73 2.06Lifetime Care and Support 0.25 - 4.50 0.89 - 4.50 0.50 - 3.00 0.80 - 3.00State Insurance Regulatory Authority 0.56 - 4.00 0.89 - 5.00 0.59 - 2.90 2.45 - 3.10Building and Construction Industry Long Service Payments Scheme 0.90 1.40 3.00 3.00HIH Loss Compensation 0.19 1.04 2.26 - 2.30 2.26 - 2.30

The discount rate for each scheme reflects current market assessments of the time value of money, and the risks specific to the liability.

Note 24



2019-20 Movement in Other Provisions

Carrying Amount

1 July 2019AdditionalProvisions

Amounts Used

Unused Amounts Reversed

Actuarial (Gain)/Loss

Unwinding/ Change In Discount

Rate

Carrying Amount30 June

2020 $m $m $m $m $m $m $m

Outstanding claims: Self Insurance Corporation (excluding Workers Compensation) 4,103 1,432 (671) ... 1,112 36 6,011

Workers' Compensation (Dust Diseases) 1,949 237 (120) ... ... 18 2,084

State Insurance Regulatory Authority 258 70 (23) ... (18) 2 290

Long Service Corporation 1,458 199 (118) ... 57 66 1,662

HIH Loss Compensation 7 ... (1) (2) ... 0 4

Victims Support Fund 135 115 (65) ... 7 1 193

NSW Share of University Superannuation 1,442 ... (67) ... (13) 19 1,381

Land Remediation, Restorations and Other Claims 2,253 616 (306) (71) (26) 12 2,477

Total Other Provisions 11,604 2,669 (1,371) (73) 1,118 153 14,101


Carrying Amount

1 July 2018AdditionalProvisions

Amounts Used




Rate


2019 $m $m $m $m $m $m $m

Outstanding claims: Self Insurance Corporation (excluding Workers Compensation) 3,692 834 (578) ... 91 64 4,103


State Insurance Regulatory Authority 144 64 (12) ... 50 12 258


HIH Loss Compensation 16 (2) (3) (4) ... 0 7

Victims Support Fund 131 86 (58) ... (26) 2 135

NSW Share of University Superannuation 1,279 186 (56) ... ... 33 1,442

Land Remediation, Restorations and Other Claims 1,895 520 (291) (43) 152 21 2,253

Total Other Provisions 10,210 2,044 (1,211) (47) 325 285 11,604

Note 24


Total State Sector


Carrying

Amount 1 July 2019

AdditionalProvisions

Amounts Used




Rate


2020 $m $m $m $m $m $m $m

Outstanding claims: Self Insurance Corporation (excluding Workers Compensation) 4,103 1,432 (671) ... 1,112 36 6,011


Lifetime Care and Support Scheme 6,186 750 (180) ... 164 434 7,354

State Insurance Regulatory Authority 258 70 (23) ... (18) 2 290


HIH Loss Compensation 7 ... (1) (2) ... 0 4

Victims Support Fund 135 115 (65) ... 7 1 193

NSW Share of University Superannuation 1,442 ... (67) ... (13) 19 1,381

Land Remediation, Restorations and Other Claims 2,647 779 (526) (78) (26) 13 2,808

Total Other Provisions 18,185 3,582 (1,771) (81) 1,283 588 21,787


Carrying

Amount 1 July 2018

AdditionalProvisions

Amounts Used




Rate


2019 $m $m $m $m $m $m $m

Outstanding claims: Self Insurance Corporation (excluding Workers Compensation) 3,692 834 (578) ... 91 64 4,103


Lifetime Care and Support Scheme 4,747 757 (161) ... 156 687 6,186

State Insurance Regulatory Authority 144 64 (12) ... 50 12 258


HIH Loss Compensation 16 (2) (3) (4) ... 0 7

Victims Support Fund 131 86 (58) ... (26) 2 135

NSW Share of University Superannuation 1,279 186 (56) ... ... 33 1,442

Land Remediation, Restorations and Other Claims 2,338 644 (385) (127) 154 23 2,647

Total Other Provisions 15,400 2,925 (1,465) (130) 483 974 18,185

Note 25


Note 25: Other Liabilities

Other Liabilities

Up-front payments received in respect of privately financed projects are deferred and amortised over the term of the arrangement. Refer to Note 16: Other Non-Financial Assets for further details.

Liabilities arising from transfers to acquire or construct non-financial assets to be controlled by the State are initially recognised at the fair value of the consideration received and are either subsequently amortised over time as the non-financial assets are being constructed, or at a point of time when non-financial assets are acquired. Refer to Note 2: Revenues for further details.

Other liabilities in the Total State Sector are comprised primarily of the interests in TCorpIM Funds of investors that are not controlled by the State such as universities, local government authorities, and the Workers Compensation Nominal Insurer. These interests represent units redeemable at the option of these investors and are classified as financial liabilities. The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemption unit price) at the reporting date if these investors exercised their right to put the units back to the Funds.

General Total



5,015 6,134 15,307 17,350

Other Liabilities Comprise: Deferred Revenues(a)(b)(c)(d) 4,321 5,313 4,509 5,624Liabilities Arising from Transfers to Acquire or Construct Non-Financial Assets to Be Controlled by the State(e) 98 ... 98 ...Other(f) 596 822 10,701 11,726

5,015 6,134 15,307 17,350

(a) Certain revenues deferred under AASB 118 in 2018-19 are now presented as contract liabilities under AASB 15 for 2019-20. Refer to Note 8: Contract Balances for the carrying amount of contract liabilities at 1 July 2019 and 30 June 2020.

(b) Deferred Revenues of $5,313 million for the General Government Sector in 2018-19 were separately presented in the 2018-19 TSSA as Deferred Revenue on the Private Provision of Infrastructure of $512 million and Other Deferred Revenue of $4,801 million. Deferred Revenues of $5,624 million for the Total State Sector in 2018-19 were separately presented in the 2018-19 TSSA as Deferred Revenue on the Private Provision of Infrastructure of $512 million and Other Deferred Revenue of $5,112 million.

(c) Deferred Revenues include payments received by the State for the reimbursement of development costs under various privately financed Infrastructure projects following the letting of the Lane Cove Tunnel, Cross City Tunnel and the Western M7 Motorway contracts. Payments were also received for the Lane Cove Tunnel and M7 Motorway concession payments and the M2 and Eastern Distributor promissory notes. These up-front payments are amortised over the life of the concession period.

(d) Deferred Revenues also include amounts for the upfront contribution of $2,479 million (2019: $2,551 million) for the 35-year concession with the private sector for the provision of land titling and registry services and lease receipts in advance of $341 million (2019: $340 million) in relation to Central Barangaroo.

(e) Liabilities Arising from Transfers to Acquire or Construct Non-Financial Assets to Be Controlled by the State have been initially recognised at 1 July 2019 on transition to AASB 1058. The carrying amount recognised for these liabilities at 1 July 2019 was $729 million for the General Government Sector and $729 million for the Total State Sector.

(f) Other liabilities of the Total State Sector include interests in TCorpIM Funds of investors that are not controlled by the State of $9,765 million (2019: $10,289 million).

Note 25


Reconciliation of Financial Assets and Corresponding Liabilities Arising from Transfers to Acquire or

Construct Non-Financial Assets to Be Controlled by the State

A reconciliation of financial assets and corresponding liabilities arising from transfers to acquire or construct non-financial assets to be controlled by the State is provided below for the current reporting period.

General Total Government Sector State Sector 2019-20 2019-20 $m $m

Opening Balance Recognised Upon Initial Application of AASB 1058 729 729Receipt of Cash During the Year 1,336 1,336Income Recognised During the Year (1,967) (1,967)

Closing Balance at 30 June 98 98

The State expects to recognise income for unsatisfied obligations associated with liabilities arising from transfers to acquire or construct non-financial assets to be controlled by the State in future reporting periods as detailed in the table below.


Financial Year which Income will be Recognised 2020-21 52 522021 and Beyond 46 46

Total 98 98

Refer to Note 2: Revenue for a description of the State’s obligations under transfers received to acquire or construct non-financial assets to be controlled by the State.

Note 26


Note 26: Financial Instruments

The principal financial instruments of the State are outlined below. These financial instruments arise directly from the State’s operations or are used to finance the State’s operations.

The note reports on the main risks as they affect the State’s financial instruments classified into:

• credit risk, which affects financial assets;

• liquidity risk, which affects financial liabilities; and

• market risk, which affects financial assets and liabilities because of changes in market prices. A reference to ‘financial instruments’ in this note excludes prepayments and statutory receivables/payables in accordance with AASB 7 Financial Instruments: Disclosures.

Risk Management Framework

The Treasury, acting for the Treasurer, has overall responsibility for the establishment and oversight of risk management guidelines for the New South Wales public sector. This includes establishing Treasury Management Policy to strengthen the framework for managing risks associated with public sector agency treasury functions, including borrowings, cash, investments, derivatives, debt and investment management.

As part of this framework, the Treasury administers the Government Sector Finance Act 2018 which is the sole source of legal power for government authorities to enter into financial arrangements.

Under this Act, the Treasurer is given responsibility for exercising a central supervisory role in respect of the investment and liability management activities of authorities to ensure that the NSW public sector’s financial risks and exposures are known, properly assessed and prudently managed. This role is affected through the requirement to have borrowing, investment and associated activities of each authority approved by the Treasurer.

NSW Treasury Corporation (TCorp) is the State’s central borrowing and investing authority. TCorp holds a level of investments for liquidity management purposes and, as the State’s central investing authority, manages the majority of the State’s investments. Bondholders include local and overseas individuals and financial institutions. TCorp manages credit risk associated with its financial assets through the selection of counterparties, establishment of minimum credit rating criteria and monitoring of credit utilisation against limits. Government agencies typically set debt / investment strategies which are then delegated to TCorp to execute on their behalf.

The State also holds borrowings that have not been made through TCorp but were made directly by individual State agencies under the authority of the Government Sector Finance Act 2018. This includes lease liabilities.

The NSW Government Asset and Liability Committee (ALCO) has been established to advise the Treasury Secretary and Government regarding State Significant Financial Risks (SSFRs). SSFRs are financial risks which have the potential to materially impact one or more of the following:

• the State’s triple-A credit rating;

• the State’s reputation; and

• the financial capacity of the State to carry out its commitments.

Note 26


Accounting Classifications and Fair Values

Financial Instrument Categories

The State’s financial instruments are classified at 30 June 2020, under AASB 9 Financial Instruments, as follows:

General Total Government Sector State Sector Note 2019-20 2018-19 2019-20 2018-19 $m $m $m $m

Financial Assets Category Cash and Cash Equivalents Amortised Cost 6 6,134 1,969 10,717 8,979Receivables(a) Amortised Cost 7 5,292 4,234 5,331 4,452Advances Paid Amortised Cost 10 1,239 1,193 776 715Investments, Loans and Placements Financial Assets at Fair Value Derivatives (Held for Trading) Mandatorily at FVTPL 9 4 3 1,340 845 Derivatives (Designated Hedging Instrument) Fair Value - Hedging Instrument 9 ... 21 1 25 Interest Bearing Securities Mandatorily at FVTPL 9 250 267 30,708 31,891 TCorpIM Funds Mandatorily at FVTPL 9 40,571 42,984 ... ... Managed Funds and Other Investments Mandatorily at FVTPL 9 48 56 13,860 11,798 Other Financial Assets Term Deposits Amortised Cost 9 157 1,462 230 1,274 Leases Receivable(b) Amortised Cost 9 906 704 1,078 1,087 Other Amortised Cost 9 92 71 98 78Equity Investments in Other Public Sector Entities(c)(d) Designated at FVOCI 11 100,249 98,573 0 0Other Equity Investments Mandatorily at FVTPL 11 7 8 21,741 24,468

Financial Liabilities Deposits Held Designated at FVTPL 18 ... ... 55 156 Amortised Cost 18 69 67 89 137Payables(e) Amortised Cost 19 6,812 6,867 7,907 8,123Advances Amortised Cost 696 756 696 756Borrowings Designated at FVTPL 20 ... ... 96,970 71,777 Amortised Cost 21 67,885 37,656 15,425 7,151Derivatives (Held for Trading) Mandatorily at FVTPL 20 392 207 1,380 977Derivatives (Designated Hedging Instrument) Fair Value - Hedging Instrument 20 0 ... 8 3Other Liabilities Interests in TCorpIM Funds of Investors Not Controlled by the State Designated at FVTPL 25 ... ... 9,765 10,289

(a) Financial instrument disclosures exclude statutory receivables not within the scope of AASB 7. Statutory receivables include taxation, fines and levies receivable totalling $5,990 million (2018-19: $3,256 million) for the General Government Sector and $5,815 million (2018-19: $3,075 million) for the Total State Sector.

(b) Financial instrument disclosures exclude lease receivables which only represent the unguaranteed residual value totalling $378 million (2018-19: $354 million) for the General Government Sector and Total State Sector.

(c) Changes in the carrying amount of Equity Investments in Other Public Sector Entities are accounted for in a manner consistent with Equity Investments at FVOCI under AASB 9.

(d) Financial instrument disclosures exclude Investments in Associates of $11,866 million (2018-19: $12,055 million) for the General Government Sector and $11,866 million (2018-19: $12,057 million) for the Total State Sector not within the scope of AASB 7.

(e) Financial instrument disclosures exclude statutory payables not within the scope of AASB 7. Statutory payables include fringe benefits tax, goods and services tax payables and insurance fund scheme balances repayable totalling $219 million (2018-19: $212 million) for the General Government Sector and $241 million (2018-19: $234 million) for the Total State Sector.

Note 26


The State determines the classification of its financial assets and liabilities after initial recognition and, when allowed and appropriate, re-evaluates this at each financial year end.

Net Gains and Losses by Financial Instrument Measurement Categories

The following table summarises financial instrument net gains and losses (‘other economic flows’) recognised in the operating result throughout the current reporting period by AASB 9 financial instrument measurement classifications.

General Total


Non-Derivative Financial Assets

Mandatorily at FVTPL(a) (1,922) 14,607 (2,197) 15,235 Amortised Cost ... ... 1 ...

Total (1,922) 14,607 (2,196) 15,235

Non-Derivative Financial Liabilities

Designated at FVTPL ... ... (1,180) (3,128) Amortised Cost 23 (147) 65 2

Total 23 (147) (1,115) (3,126)

Derivative Financial Instruments FVTPL – Held for Trading (192) (203) (272) (237) Fair Value - Hedging Instrument 9 4 9 4

Total (183) (199) (263) (233)

Net Total(b)(c)(d) (2,082) 14,261 (3,574) 11,876

(a) The 2018-19 comparative period amount includes $13.2 billion in relation to the West Connex Group transaction occurring during the comparative 2018-19 financial year. Refer to Note 5: Discontinued Operations for further information.

(b) The net total equates to the sum of ‘fair value adjustments to financial instruments’ and ‘net gains / losses on financial assets at fair value through profit and Loss’ amounts reported in Note 4: Other Economic Flows Included in the Operating Result.

(c) Refer to ‘other dividends and distributions’ in Note 2: Revenue for distributions from managed funds mandatorily measured at FVTPL. (d) Refer to ‘other economic flows – other comprehensive income’ in the Consolidated Statement of Comprehensive Income for gains and

losses deferred to equity in the hedging reserve for fair value – hedging financial instruments (‘net gain/(loss) on financial instruments at fair value’) and in the financial assets at fair value through other comprehensive income reserve for equity investments designated at FVOCI (‘net gain/(loss) on equity instruments at fair value through other comprehensive income’).

Note 26


Interest Revenue and Interest Expense by Financial Instrument Measurement Category

The following table summarises interest revenue and expense recognised throughout the current reporting period by AASB 9 financial instrument measurement classifications.

General Total

Government Sector State Sector 2019-20 2018-19 2019-20 2018-19 Restated(b)

$m $m $m $m

Interest Income From:(a) Financial Assets at Amortised Cost 359 484 365 464 Financial Assets at FVTPL 5 7 245 338

Total(a) 364 491 610 801

Interest Expense From:(b)(c) Financial Liabilities at Amortised Cost 1,930 1,544 828 623 Financial Liabilities at FVTPL ... ... 2,151 2,154

Total(c) 1,930 1,544 2,980 2,777

(a) Interest revenue of $364 million (2018-19: $491 million) for the General Government Sector and $610 million (2018-19: $801 million) for the Total State Sector equates to total interest revenue reported as part of ‘interest’ in Note 2: Revenue.

(b) Total State Sector comparatives for interest expense classifications have been restated on receipt of revised information after the 2018-19 TSSA.

(c) Interest expense of $1,930 million (2018-19: $1,544 million) for the General Government Sector equates to the sum of interest on borrowings of $1,622 million (2018-19: $1,331 million) and interest on lease liabilities of $308 million (2018-19: $213 million) reported in Note 3: Expenses (‘interest expense’). Interest expense of $2,980 million (2018-19: $2,777 million) for the Total State Sector equates to the sum of interest on borrowings of $2,386 million (2018-19: $2,299 million) and interest on lease liabilities of $594 million (2018-19: $478 million) reported in Note 3: Expenses (‘interest expense’).

Note 26


Valuation of Financial Instruments

Except where specified below, the amortised cost of financial instruments recognised in the Consolidated Statement of Financial Position approximates the fair value because of the short-term nature of many of the financial instruments.

Fair Value Hierarchy of Financial Assets and Liabilities

The following tables set out the State’s financial assets and liabilities measured at fair value according to the fair value hierarchy at reporting date.


30 June 2020 Note Level 1 Level 2 Level 3 Total $m $m $m $m

Financial Assets Investments, Loans and Placements Derivatives Held for Trading 9 4 ... ... 4

Financial Assets at Fair Value Interest Bearing Securities 9 14 237 ... 250

TCorpIM Funds 9 ... 40,571 ... 40,571

Managed Funds and Other Investments 9 42 6 ... 48

Other Equity Investments 11 ... 7 0 7

Total 60 40,821 0 40,881

Financial Liabilities Derivatives Held for Trading 20 18 373 ... 392

Total 18 373 0 392

Net Total 41 40,448 (0) 40,489


Financial Assets Investments, Loans and Placements Derivatives Held for Trading 9 3 0 ... 3

Designated and Effective Hedging Instruments 9 ... 20 1 21

Financial Assets at Fair Value Interest Bearing Securities 9 8 259 ... 267

TCorpIM Funds 9 ... 42,984 ... 42,984

Managed Funds and Other Investments 9 56 ... ... 56

Other Equity Investments 11 ... 0 8 8

Total 67 43,263 9 43,339

Financial Liabilities Derivatives Held for Trading 20 11 196 ... 207

Total 11 196 ... 207

Net Total 56 43,067 9 43,132

Note 26


Total State Sector


Financial Assets Investments, Loans and Placements Derivatives Held for Trading 9 22 1,317 ... 1,340

Designated and Effective Hedging Instruments 9 ... 1 ... 1

Financial Assets at Fair Value Interest Bearing Securities 9 2,860 27,425 423 30,708

Managed Funds and Other Investments 9 1,048 8,679 4,133 13,860

Other Equity Investments 11 21,595 6 140 21,741

Total 25,525 37,428 4,696 67,650

Financial Liabilities Deposits Held Held by Public Financial Corporations 18 55 ... ... 55

Derivatives Held for Trading 20 8 1,372 ... 1,380

Designated and Effective Hedging Instruments 20 1 7 ... 8

Borrowings at Fair Value Bonds and Other Borrowings Issued by TCorp 20 80,852 14,984 1,134 96,970

Other Liabilities Interests in TCorpIM Funds of Investors Not Controlled by the State 25 ... 9,765 ... 9,765

Total 80,915 26,128 1,134 108,178

Net Total (55,390) 11,300 3,563 (40,529)


Financial Assets Investments, Loans and Placements Derivatives Held for Trading 9 30 815 ... 845

Designated and Effective Hedging Instruments 9 2 22 1 25

Financial Assets at Fair Value Interest Bearing Securities 9 7,232 24,524 135 31,891

Managed Funds and Other Investments 9 806 7,792 3,200 11,798

Other Equity Investments 11 24,328 0 140 24,468

Total 32,398 33,153 3,476 69,027

Financial Liabilities Deposits Held Held by Public Financial Corporations 18 156 ... ... 156

Derivatives Held for Trading 20 12 965 ... 977

Designated and Effective Hedging Instruments 20 2 1 ... 3

Borrowings at Fair Value Bonds and Other Borrowings Issued by TCorp 20 61,678 9,372 727 71,777

Other Liabilities Interests in TCorpIM Funds of Investors Not Controlled by the State 25 ... 10,289 ... 10,289

Total 61,848 20,627 727 83,202

Net Total (29,450) 12,526 2,749 (14,175)

Note 26


Annual Movement Reconciliation of Level 3 Fair Value Measurements

The following tables set out the State’s change in exposure throughout the reporting period to financial instruments categorised as Level 3 in the fair value measurement hierarchy.


Derivative Assets - Designated and

Effective Hedging Instruments

Other Equity Instruments

Total Recurring Level 3 Fair Value

Note 9 11 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19 $m $m $m $m $m $m

Financial Assets Opening Balance 1 ... 8 680 10 680

Gains or Loss Recognised in Other Economic Flows Included in the Operating Result ... ... (1) ... (1) ...

Included in Other Comprehensive Income (1) ... 0 (680) (1) (680)

Purchases ... ... 0 0 0 0

Transfers into Level 3 ... 1 ... 8 ... 9

Transfers out of Level 3 ... ... (7) ... (7) ...

Closing Balance ... 1 0 8 0 9

Net Total ... 1 0 8 0 9

Total State Sector

Derivative Assets -

Designated and Effective Hedging

Instruments

Interest Bearing

Securities

Managed Funds and

Other Investments

Other Equity Instruments

Bonds and Other

Borrowings Issued by TCorp

Total Recurring Level 3 Fair

Value Note 9 9 9 11 20 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19

$m $m $m $m $m $m $m $m $m $m $m $m

Financial Assets

Opening Balance 1 ... 135 118 3,200 2,929 140 803 ... ... 3,476 3,850

Gains or Loss Recognised in Other Economic Flows Included in the Operating Result ... ... (7) 4 (222) 140 7 9 ... ... (222) 153

Included in Other Comprehensive Income (1) ... ... ... ... ... ... (680) ... ... (1) (680)

Purchases ... ... 296 4 1,291 226 0 0 ... ... 1,586 230

Sales / Settlements ... ... (1) (0) (135) (95) ... (0) ... ... (135) (96)

Transfers into Level 3 ... 1 ... 9 ... ... ... 8 ... ... ... 18

Transfers out of Level 3 ... ... ... ... ... ... (7) ... ... ... (7) ...

Closing Balance ... 1 423 135 4,133 3,200 140 140 ... ... 4,696 3,476

Financial Liabilities Opening Balance ... ... ... ... ... ... ... ... 727 636 727 636

Gains or Loss Recognised in Other Economic Flows Included in the Operating Result ... ... ... ... ... ... ... ... 21 104 21 104

Purchases ... ... ... ... ... ... ... ... 400 ... 400 ...

Sales / Settlements ... ... ... ... ... ... ... ... (14) (13) (14) (13)

Closing Balance ... ... ... ... ... ... ... ... 1,134 727 1,134 727

Net Total ... 1 423 135 4,133 3,200 140 140 (1,134) (727) 3,563 2,749

Note 26


Transfers between levels of the fair value hierarchy are recognised at the end of the reporting period during which the transfer has occurred. There were no transfers into level 3 of the fair value hierarchy for the year ended 30 June 2020. Transfers into level 3 of the fair value hierarchy for the year ended 30 June 2019 totalled $9 million for the General Government Sector and $18 million for the Total State Sector. Transfers out of level 3 of the fair value hierarchy for the year ended 30 June 2020 totalled $7 million for the General Government Sector and Total State Sector (2018-19: Nil). Valuation policies and procedures of the State are developed, reviewed and enforced by management of the respective agencies.

Measurement of Fair Values

Financial Instruments Measured at Fair Value – Level 2

Financial instruments measured at fair value that are classified at level 2 of the fair value hierarchy comprise derivatives, interest bearing securities, TCorpIM Funds, managed funds and other investments, borrowings measured at fair value, and other equity investments. The valuation techniques and inputs for these financial instruments are as follows:

Derivatives (Held for Trading and Effective Hedging Instruments) - The fair values are based on market quoted prices of similar instruments or discounted cash flow analysis depending on whether the derivatives are traded in an active market. Primary valuation inputs include spot FX rates, swap rates and basis curves.

Interest Bearing Securities – The fair value is based on market comparisons of quoted prices of comparable securities or discounting of expected future cash flows to their present value using benchmark market yields and margins appropriate to the securities.

TCorpIM Funds – The value of the TCorpIM Funds is based on the State’s share of the value of the underlying assets of the fund, based on the market value. All of the TCorpIM Funds are valued using ‘redemption’ pricing.

Managed Funds and Other Investments – The fair value of unlisted managed fund investments is based on the State’s share of the unit values using ‘redemption’ pricing provided by external fund managers.

Borrowings Measured at Fair Value (Bonds and Other Borrowings Issued by TCorp) – The fair value is based on discounting of expected future cash flows to their present value using benchmark market yields and margins appropriate to the borrowings.

Note 26


Financial Instruments Measured at Fair Value – Level 3

The valuation techniques and inputs for financial instruments classified at level 3 of the fair value hierarchy are summarised in the following table:

Type Valuation technique Significant unobservable inputs

Relationship between inputs and fair value

Managed funds and other investments (Note 9: Investments, Loans and Placements)

Unlisted managed investment funds and unit trusts held in TCorpIM Fund Trusts, that are classified at level 3, are infrequently traded. These investments directly hold assets such as unlisted property or unlisted infrastructure which require significant valuation estimation and judgement by the fund manager and their valuer.

The funds’ investment in unlisted managed investment funds is carried at fair value based on redemption value per unit reported by the manager of the funds. The unobservable inputs are published redemption prices.

There were no significant inter-relationships between unobservable inputs that materially affect fair value.

Other equity investments (Note 11: Equity Investments) and interest-bearing securities (Note 9: Investments, Loans and Placements)

Unlisted equity securities and loan notes held in TCorpIM Fund Trusts, that are classified at level 3, are infrequently traded. As observable prices are not available for these investments, valuation techniques are used to derive fair value. The valuation technique employed in most cases is the discounted cashflows technique (the income approach).

The significant unobservable inputs for these investments are the inflation rate, discount rate and terminal growth rates used in the discounted cashflows valuation.


Borrowings measured at fair value - bonds and other borrowings issued by TCorp (Note 20: Borrowings and Derivative Liabilities at Fair Value)

Euro medium term notes held by TCorp are classified at level 3 in the fair value hierarchy. These instruments are foreign currency denominated fixed interest borrowings. The fair value of these borrowings is derived from quoted market prices of the underlying securities adjusted by unobservable inputs for risk.

The quoted prices obtained for these securities are subject to a buy/sell spread (also known as a risk adjustment) in recognition of the limited trading activity of these bonds. This ‘spread’ is unobservable.


Note 26


Financial Instruments Not Measured at Fair Value

The State has financial assets and liabilities which are not measured at fair value in the Consolidated Statement of Financial Position but for which the fair value is disclosed in this note. The amortised cost of cash and cash equivalents, receivables, advances paid, finance leases receivable, term deposits, other financial assets (other), payables, deposits held, and advances held are assumed to approximate fair value.

The following table details the financial instruments where the fair value differs from the carrying amount.

30 June 2020 General Total Government Sector State Sector

NoteCarrying Amount Fair Value

Carrying Amount Fair Value

$m $m $m $m

Financial Liabilities Borrowings at Amortised Cost Other Borrowings at Amortised Cost 21 55,821 60,981 35 35 Lease Liabilities(a) 21 8,437 8,437 11,764 12,031 Financial Liabilities Arising from Public Private Partnerships (PPPs) 21 3,627 3,627 3,627 3,627

Total 67,885 73,045 15,425 15,693

(a) The State continues to recognise AASB 117 finance lease liabilities for several PFPs accounted for in accordance with TPP06-8. Lease liabilities for 2019-20 includes finance lease liabilities recognised for PFP arrangements of $1,352 million for the General Government Sector and $1,994 million for the Total State Sector. Refer to Note 16: Other Non-Financial Assets for recognition and measurement policies applied for PFPs accounted for under TPP06-8.

30 June 2019 General Total Government Sector State Sector

NoteCarrying Amount Fair Value

Carrying Amount Fair Value

$m $m $m $m

Financial Liabilities Borrowings at Amortised Cost Other Borrowings at Amortised Cost 21 33,233 37,392 31 31 Finance Lease Liabilities 21 2,590 2,590 5,287 5,440 Financial Liabilities Arising from Public Private Partnerships (PPPs) 21 1,834 1,834 1,834 1,834

Total 37,656 41,816 7,151 7,304

Other borrowings at amortised cost held by the General Government Sector is the only financial instrument category where fair value significantly differs from the carrying amount. The fair value is based on the State’s share of the value of the underlying assets of the facility, based on the market value. Other borrowings at amortised cost are primarily included in the fair value hierarchy at level 2.

Note 26


Offsetting Financial Instruments

Financial instruments are offset, and the net amount is reported in the Consolidated Statement of Financial Position if the State currently has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

The State also enters into various derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements. Under these agreements, the amounts owed by each counterparty in respect of all transactions outstanding are aggregated into a single net amount that is payable by one party to the other. In certain circumstances, such as when a credit event such as a default occurs, all outstanding transactions under the agreement are terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions. The ISDA agreements do not meet the criteria for offsetting in the Consolidated Statement of Financial Position. This is because the State does not have any currently legally enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events.

The following tables set out the carrying amounts of recognised financial instruments for the Total State Sector that are offset in the Consolidated Statement of Financial Position and those that are not offset but are subject to master netting agreements. The General Government Sector has not offset any material financial instrument balances in the Consolidated Statement of Financial Position or entered into any significant master netting arrangements as at 30 June 2020 (2018-19: Nil).

Total State Sector

30 June 2020 Effects of Offsetting on the Balance Sheet Related Amounts Not Offset

Gross

Amounts

Gross Amounts Offset in the Statement of

Financial Position

Net Amounts Presented in the


Amounts Subject to Master Netting

Arrangements

Financial Instrument Collateral

Net Amount


Financial Assets Cash and Cash Equivalents 6 10,717 ... 10,717 ... ... 10,717Investments, Loans and Placements Financial Assets at Fair Value Derivatives - Held for Trading 9 1,361 (21) 1,340 (795) (152) 393Receivables Other(a) 7 2,542 ... 2,542 ... (8) 2,534Total 14,620 (21) 14,599 (795) (159) 13,645

Financial Liabilities Borrowings and Derivatives at Fair Value Bonds and Borrowings Issued by TCorp 20 (96,970) ... (96,970) ... 1,002 (95,968) Derivatives - Held for Trading 20 (1,401) 21 (1,380) 795 491 (94)Total (98,371) 21 (98,350) 795 1,493 (96,062)

(a) Amounts offset as part of Receivables (Other) relate to margin account amounts receivable.

30 June 2019 Effects of Offsetting on the Balance Sheet Related Amounts Not Offset

Gross

Amounts

Gross Amounts Offset in the Statement of

Financial Position

Net Amounts Presented in the


Amounts Subject to Master Netting

Arrangements

Financial Instrument Collateral

Net Amount


Financial Assets Cash and Cash Equivalents 6 8,979 ... 8,979 ... (1,096) 7,883Investments, Loans and Placements Financial Assets at Fair Value Derivatives - Held for Trading 9 848 (3) 845 (632) (158) 56Receivables Other(a)(b) 7 2,124 ... 2,124 ... (15) 2,109

Total 11,952 (3) 11,949 (632) (1,270) 10,047

Financial Liabilities Borrowings and Derivatives at Fair Value Bonds and Borrowings Issued by TCorp 20 (71,777) ... (71,777) ... 586 (71,191) Derivatives - Held for Trading 20 (980) 3 (977) 632 246 (99)Total (72,757) 3 (72,754) 632 832 (71,290)

(a) Amounts offset as part of receivables (other) relate to margin account amounts receivable. (b) Receivables (other) have been revised for 2018-19 after subsequent publication of the 2018-19 TSSA. Refer to Note 7: Receivables for further

information.

Note 26


Credit Risk of Financial Assets

Credit risk arises when there is the possibility of the State’s counterparties defaulting on their contractual obligations, resulting in a financial loss to the State. Credit risk arises from cash and cash equivalents, contractual cash flows of interest-bearing securities and other financial assets at amortised cost, term deposits with banks and financial institutions, derivative financial assets, as well as credit exposures to commercial entities and individuals, including outstanding receivables and finance leases receivable.

The carrying amount of financial assets and contract assets represents the State’s maximum credit exposure (net of any allowance for credit losses or allowance for impairment) at the end of the reporting period.

Credit risk associated with the State’s financial assets, other than receivables, is managed through the selection and monitoring of counterparties and establishment of minimum credit rating standards.

All financial assets, except for those measured at FVTPL, are subject to an annual review for impairment.

The State controls the borrowing and investing powers of its authorities through the Government Sector Finance Act 2018. The provision for the Treasurer to schedule authorities under this Act restricts the ability and amount that public authorities can borrow and invest and directs most authorities to finance through TCorp. Agencies with approved investing powers outside of TCorp are restricted to invest in classes of investments in accordance with the Government Sector Finance Act 2018.

The State holds various security deposits in the General Government Sector to the value of $69 million (2018-19: $67 million) and in the Total State Sector to the value of $144 million (2018-19: $293 million).

The State may obtain, or provide, collateral to support amounts due under derivative transactions with certain counterparties. The collateral may include cash or eligible securities obtained, or provided, when agreed market value thresholds are exceeded. There was $337.7 million of collateral received under these arrangements at the reporting date (2018-19: $308.7 million). The State paid $485.9 million of collateral under these arrangements throughout the year (2018-19: $239.7 million).

Cash and Cash Equivalents

Cash and cash equivalents (Note 6) comprises cash on hand, cash invested in the TCorpIM Funds, and cash and deposits held at financial institutions. Interest is earned on daily bank balances at agreed rates. The TCorpIM Cash Fund is discussed in market risk below. The credit ratings of other institutions holding non TCorpIM cash is within acceptable credit risk parameters.

Trade Receivables, Contract Assets and Lease Receivables

Receivables (Note 7) and contract assets (Note 8) exist for the settlement of services that the State provides across the range of its public services. All debtors are recognised as amounts receivable at reporting date. Sales are made on terms appropriate to the sector providing the public service. Collectability of debtors is reviewed on an ongoing basis. Established procedures are followed to recover outstanding debt amounts, including letters of demand.

In addition, amounts due from lessees to the State under finance leasing arrangements are recorded as leases receivable (Note 9). The State has issued finance leases over land and buildings and infrastructure property, plant and equipment.

The annual movement in the contractual receivables allowance for expected credit losses for the current reporting period is summarised below.

General Total


Opening Balance at 1 July 177 168 202 189

Amounts Written Off to the Net Operating Balance During the Year (64) (61) (69) (66)Amounts Previously Provided for Recovered During the Year 5 (1) 5 (2)Increase/(Decrease) in Allowance Recognised in Other Economic Flows - Operating Result 82 71 92 81

Closing Balance at 30 June(a) 201 177 230 202

(a) Excludes impairment on statutory receivables (i.e. not within the scope of AASB 7).

Note 26


The State did not recognise any impairment on contract assets throughout the 2019-20 financial year.

The State has assessed that leases receivable are not impaired at 30 June 2020 (2018-19: Nil Impairment). The State’s investments in these instruments are low risk and are with counterparties with low levels of default.

The State applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all receivables, contract assets and finance leases receivable.

To measure the expected credit losses, these assets have been grouped based on shared credit risk characteristics and the days past due.

The State determines the expected credit losses for these assets by using a provision matrix, with the expected loss rates based on historical observed loss rates. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The State has identified the unemployment rate, wages growth rate and CPI inflation to be the most relevant factors, and has accordingly adjusted the historical loss rates based on expected changes in these factors.

The credit risk profile of these assets is analysed based on their past due status. The majority of impaired receivables as at the 30 June 2020 reporting date have been past due for a period greater than six months.

Receivables, contracts assets and lease receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, a failure to make contractual payments for a period of greater than 90 days past due.

The State provides services to a broad spectrum of the NSW economy, for example for water and public housing. Debtors include individual households and commercial businesses with various credit ratings. The State is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors.

Investments, Loans and Placements and Advances Paid

The State is also subject to credit risk from interest bearing securities, term deposits, advances paid, and other financial assets at amortised cost.

The credit quality of these investments is managed using Standard and Poor’s ratings categories. Exposure in each grade is monitored to ensure that it is in accordance with mandated parameters. To be eligible for investment, counterparties must satisfy minimum credit worthiness criteria.

The following tables present an analysis of the credit quality of these investments. The tables also detail whether investments classified at amortised cost were subject to a 12-month expected credit losses allowance or lifetime expected credit losses allowance and, in the latter case, whether they were credit-impaired.

Note 26



30 June 2020

Credit Rating(a) Note AAA AA+ AA AA- A+ A Other

Ratings(b) Loss

AllowanceCarrying Amount

$m $m $m $m $m $m $m $m $m

Financial Assets at Carrying Amount Financial Assets at Fair Value

Interest Bearing Securities 9 174 57 ... 0 ... ... 19 ... 250

Financial Assets at Amortised Cost with 12-Month ECLs Other Financial Assets Term Deposits 9 30 ... ... 92 32 ... 3 ... 157

Other 9 4 ... ... ... ... ... 88 ... 92

Financial Assets at Amortised Cost with Lifetime ECLs Advances Paid 10 ... ... ... ... ... ... 1,251 (12) 1,239

208 57 ... 92 32 ... 1,361 (12) 1,738

30 June 2019

Credit Rating(a) Note AAA AA+ AA AA- A+ AOther

Ratings(b) Loss


$m $m $m $m $m $m $m $m $m

Financial Assets at Carrying Amount Financial Assets at Fair Value Interest Bearing Securities 9 208 ... 40 0 ... ... 18 ... 267

Financial Assets at Amortised Cost with 12-Month ECLs Other Financial Assets 9 Term Deposits 9 437 ... ... 940 67 ... 18 ... 1,462

Other ... ... ... ... ... ... 71 ... 71

Financial Assets at Amortised Cost with Lifetime ECLs Advances Paid 10 ... ... ... ... ... ... 1,197 (4) 1,193

645 ... 40 940 67 ... 1,305 (4) 2,993

(a) Amounts are assigned to the credit ratings categories based on information provided by individual agencies who use rankings assigned by S&P. ‘AAA’, ‘AA+’, ‘AA’, ‘AA-‘, ‘A+’, ‘A’ displayed in the column headings are ratings categories by S&P that are comparable with ‘Aaa’, ‘Aa1’,’Aa2’, ‘Aa3’, ‘A1’,’A2’ ratings given by Moody's.

(b) Short term ratings of A2 or better, when the counterparty has no long term rating or the long term rating is A- or lower.

Note 26


Total State Sector

30 June 2020


Ratings(b) Loss


$m $m $m $m $m $m $m $m $m

Financial Assets at Carrying Amount Financial Assets at Fair Value

Interest Bearing Securities 9 5,304 1,643 2,272 8,872 3,283 1,214 8,119 ... 30,708

Financial Assets at Amortised Cost with 12-Month ECLs Other Financial Assets Term Deposits 9 ... ... ... 148 32 ... 50 ... 230

Other 9 4 ... ... ... ... ... 94 ... 98

Financial Assets at Amortised Cost with Lifetime ECLs Advances Paid 10 ... ... ... ... ... ... 788 (12) 776

5,308 1,643 2,272 9,020 3,316 1,214 9,051 (12) 31,812

30 June 2019


Ratings(b) Loss


$m $m $m $m $m $m $m $m $m

Financial Assets at Carrying Amount Financial Assets at Fair Value Interest Bearing Securities 9 4,480 2,034 247 10,358 3,010 2,130 9,632 ... 31,891

Financial Assets at Amortised Cost with 12-Month ECLs Other Financial Assets 9 Term Deposits 9 ... ... ... 1,090 67 ... 117 ... 1,274

Other ... ... ... ... ... ... 78 ... 78

Financial Assets at Amortised Cost with Lifetime ECLs Advances Paid 10 ... ... ... ... ... ... 719 (4) 715

4,480 2,034 247 11,447 3,077 2,130 10,546 (4) 33,958

(a) Refer to footnote in General Government Sector table above. (b) Refer to footnote in General Government Sector table above.

The State has placed funds on deposit with various financial institutions consisting of money market or bank deposits and can be placed 'at call' or for a fixed term. These term deposits are considered to have low credit risk, and the loss allowance calculated for these investments during the period was therefore limited to 12 months expected credit losses. The State did not recognise any expected credit losses on term deposits for the current reporting period ended 30 June 2020 (2018-19: Nil).

The State has recognised expected credit losses for advances paid in the General Government Sector and Total State Sector to the value of $12.0 million (2018-19: $4.0 million). Lifetime expected credit losses have been recognised for advances provided given increases in credit risk since initial recognition. This assessment has been performed based on reviews of actual and expected changes in external market indicators, internal factors and debtor-specific information.

The maximum exposure at the end of the reporting period for interest bearing securities is the fair value carrying amount of the investments.

Derivatives

The majority of derivative financial assets of the State are entered with banking and financial institution counterparties, which are predominately rated AA- to A+, based on Standard and Poor’s ratings categories.

Note 26


Liquidity Risk of Liabilities

Liquidity risk is the risk that the State will be unable to meet its payment obligations when they fall due. The State, through its agencies, continuously manages risk through monitoring future cash flows and maturities and planning to ensure adequate holdings of high-quality liquid assets are maintained.

The State is exposed to liquidity risk mainly through the maturity of its external borrowings raised by TCorp. TCorp maintains adequate levels of liquidity within approved minimum prudential and maximum ranges. The minimum prudential level is defined as a percentage of total liabilities and is held to meet unanticipated calls and to cover temporary market disruptions. Additional levels of liquidity are maintained up to the maximum approved range to satisfy a range of circumstances, including agency funding requirements, maturing commitments, and balance sheet management activities.

There were no defaults of borrowings throughout the current and comparative reporting periods.

The State has reviewed its financial guarantees and determined that there is no material liability to be recognised for financial guarantee contracts as at 30 June 2020 and as at 30 June 2019. However, refer to Note 30: Contingent Assets and Contingent Liabilities regarding disclosures on guarantee arrangements.

Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced. Trade terms vary, depending upon the service performed and the agreement made with the debtor.

Note 26


Maturity Analysis of Financial Liabilities

The table below summarises the maturity profile of the State’s financial liabilities prepared using contractual undiscounted cash flows. This comprises loan commitments which include both borrowings at face value and future interest commitments.


30 June 2020 Contract maturity: Nominal Amount(a)

Carrying Amount Note 1 year or less 1 to 5 years Over 5 years

$m $m $m $m $m

Contractual Maturities of Financial Liabilities Non-Derivatives Deposits Held 18 69 0 ... 69 69

Payables(b) 19 6,812 ... ... 6,812 6,812

Advances Received 118 282 576 976 696

Borrowings Other Borrowings at Amortised Cost 21 2,800 22,169 40,942 65,912 55,821

Lease Liabilities 21 944 2,905 5,910 9,759 7,085

Finance Lease Liabilities(c) 21 235 705 1,830 2,769 1,352

Financial Liabilities arising from Public Private Partnerships (PPP) 21 1,118 2,277 1,921 5,317 3,627

Total Non-Derivatives 12,097 28,337 51,179 91,613 75,462

Derivatives Derivative Liabilities(d) Held for Trading 20 32 77 341 450 392

Total Derivatives 33 77 341 450 392



$m $m $m $m $m

Contractual Maturities of Financial Liabilities Non-Derivatives Deposits Held 18 67 ... ... 67 67

Payables(b) 19 6,867 ... ... 6,867 6,867

Advances Received 110 296 654 1,060 756

Borrowings Other Borrowings at Amortised Cost 21 1,696 12,242 27,751 41,689 33,233

Finance Lease Liabilities 21 448 1,589 3,020 5,057 2,590

Financial Liabilities arising from Public Private Partnerships (PPP) 21 196 793 2,016 3,005 1,834


Derivatives Derivative Liabilities(d) Held for Trading 20 17 51 201 269 207

Total Derivatives 17 51 201 269 207

(a) The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities and therefore will not reconcile to the Consolidated Statement of Financial Position, which is based on fair value or amortised cost. The balances presented here include gross finance lease obligations, contractual amounts to be exchanged in a derivative financial instrument for which gross cash flows are exchanged, and gross loan commitments, i.e. borrowings at face value plus future interest commitments.

(b) Excludes statutory payables (i.e. not within the scope of AASB 7). (c) AASB 117 finance lease liabilities are recognised for PFP assets as per the requirements of TPP06-8. (d) The contractual maturity analysis and liquidity risk of derivative liabilities is the best approximation derived from reasonable estimates that

were calculated from information sourced from major NSW agencies. These balances include estimated interest payments and exclude the impact of offsetting arrangements.

Note 26


Total State Sector



$m $m $m $m $m

Contractual Maturities of Financial Liabilities Non-Derivatives Deposits Held 18 144 0 ... 144 144

Payables(b) 19 7,907 ... 1 7,907 7,906

Advances Received 118 282 576 976 696

Borrowings Bonds and Other Borrowings Issued By TCorp 20 16,998 34,302 51,593 102,893 96,970

Other Borrowings at Amortised Cost 21 4 15 15 34 35

Lease Liabilities 21 1,238 3,937 10,379 15,554 9,770

Finance Lease Liabilities(c) 21 339 1,109 3,013 4,461 1,994

Financial Liabilities arising from Public Private Partnerships (PPP) 21 1,118 2,277 1,921 5,317 3,627

Other Liabilities

Interests in TCorpIM Funds of Investors Not Controlled by the State 25 9,765 ... ... 9,765 9,765


Derivatives Derivative Liabilities(d)(e) Held for Trading 20 292 782 1,017 2,091 1,380

Designated and Effective Hedging Instruments 20 37 21 ... 58 8

Total Derivatives 328 803 1,017 2,149 1,388



$m $m $m $m $m

Contractual Maturities of Financial Liabilities Non-Derivatives Deposits Held 18 293 0 0 293 293

Payables(b)(e) 19 8,123 ... ... 8,123 8,123

Advances Received 110 296 654 1,060 756

Borrowings ... ... ... ... ...

Bonds and Other Borrowings Issued By TCorp 20 11,636 22,677 44,084 78,396 71,777

Other Borrowings at Amortised Cost and Fair Value 21 6 18 8 32 31

Finance Lease Liabilities 21 736 2,735 8,591 12,063 5,287

Financial Liabilities arising from Public Private Partnerships (PPP) 21 196 793 2,016 3,005 1,834

Other Liabilities

Interests in TCorpIM Funds of Investors Not Controlled by the State 25 10,289 ... ... 10,289 10,289


Derivatives Derivative Liabilities(d)(e) Held for Trading 20 310 808 807 1,925 977

Designated and Effective Hedging Instruments 20 43 14 ... 58 3

Total Derivatives 353 823 807 1,982 980

(a) Refer to footnote in General Government Sector table above. (b) Refer to footnote in General Government Sector table above. (c) Refer to footnote in General Government Sector table above. (d) Refer to footnote in General Government Sector table above. (e) Total State Sector derivative liabilities have corresponding contractual undiscounted cash inflows of $1,770 million (2018-19: $1,921

million).

Note 26


Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The State’s exposures to market risk are primarily through:

• interest rate risk on the State’s borrowings and investments;

• price risks associated with the movement in price of TCorpIM Funds, managed fund investments, and equity instruments; and

• foreign exchange risk that could affect borrowings, investments and the value of overseas purchases. The State does not have material exposures to commodity price risk. For market risk, the effect on the ‘operating result’ and ‘net worth’ to a reasonably possible change in a risk variable is outlined in the information below. A reasonably possible change in a risk variable has been determined after taking into account the economic environment in which the State operates and the time frame for the assessment (i.e. until the end of the next annual reporting period). The sensitivity analysis is based on risk exposures in existence at the reporting date.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Exposure to interest rate risk arises primarily through the State’s interest-bearing assets and liabilities including interest bearing securities and borrowings.

Total State Sector – TCorp Debt Funding Holdings in Interest Bearing Securities and Borrowings

TCorp manages the debt portfolio for most of the agencies of the State. TCorp measures its exposure to interest rate risk in terms of cash flows or notional cash flows generated from holdings in interest bearing securities (Note 9) and borrowings at fair value (Note 20). The boundaries within which interest rate risk is undertaken and managed are established under approved TCorp policies, management guidelines and client defined mandates. Derivatives are also employed by TCorp to manage interest rate risk for interest bearing assets and liabilities.

TCorp employs a Value at Risk (VaR) model to measure the market risk exposures of TCorp borrowings and investments in the Consolidated Statement of Financial Position. VaR is calculated daily and represents an estimate of the loss that can be expected over a 10-day period, with a one per cent probability that this amount may be exceeded. Given TCorp’s financial position at 30 June 2020, the maximum potential loss for the Total State Sector expected over a 10-day period is $5.6 million (2018-19: $7.4 million), with a one per cent probability that this maximum may be exceeded. The average VaR over the year ended 30 June 2020 was $5.8 million (2018-19: $4.9 million).

Total State Sector – TCorpIM Fund Trust Investments in Interest Bearing Securities

The Total State Sector is exposed to interest rate risk through TCorpIM Fund Trust investments in interest bearing securities (Note 9). Interest rate risk exposures arising from these investments are primarily measured and managed using duration and mandated limits specified in investment agreements.

The Total State Sector’s exposure to interest rate risk arising from these investments is set out in the tables below. A reasonably possible change of +/- 1.0 per cent is used, consistent with current trends in interest rates. The basis will be reviewed annually and amended where there is a structural change in the level of interest rate volatility.

Total State Sector

2019-20 2018-19 -1% 1% -1% 1% Restated(a) Restated(a)

$m $m $m $m

Operating Result (345) 345 (283) 283Net Worth (345) 345 (283) 283

(a) Comparatives have been restated on receipt of revised information after the 2018-19 TSSA. A sensitivity rate of 0.3 per cent was used in the 2018-19 TSSA. In 2019-20, a sensitivity rate of 1 per cent has been used. The 2018-19 comparative sensitivity analysis has been amended to use 1 per cent to allow for comparison with 2019-20.

Note 26


General Government Sector and Total State Sector – Other Financial Assets and Liabilities

The State’s remaining exposure to interest rate risk is primarily from cash and cash equivalents (Note 6), borrowings at amortised cost (Note 21) and term deposits (Note 9). The State predominately manages this risk by undertaking mainly fixed rate borrowings with TCorp. A small number of agencies engage private sector financial institutions to manage or advise on the management of their debt portfolios or manage their own portfolios.

The State’s exposure to interest rate risk from remaining financial assets and liabilities is set out in the tables below. A reasonably possible change of +/- 1 per cent is used, consistent with current trends in interest rates. The basis will be reviewed annually and amended where there is a structural change in the level of interest rate volatility.

30 June 2020 General Total Government Sector State Sector -1% 1% -1% 1% $m $m $m $m


30 June 2019 General Total Government Sector State Sector -1% 1% -1% 1% $m $m $m $m


Note 26


Price Risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will change because of movements in market prices. This risk arises from investments held by the State for which prices in the future are uncertain.

Total State Sector – TCorpIM Fund Trust Investments in Equities and Managed Fund Investments

The Total State Sector is primarily subject to price risk from consolidated TCorpIM Fund Trust holdings in managed funds (Note 9) and other equity investments (Note 11). These investments are categorised as financial assets at FVTPL with the carrying amount of these investments representing the State's maximum price risk at the reporting date. Any change in the price of these investments impacts directly on the operating result.

TCorp, as Trustee, mitigates price risk from listed equity instruments by diversifying exposure across a range of investment managers and markets. Benchmarks are established for each investment manager with TCorp monitoring performance relative to those benchmarks. Price risk from holdings in managed investment funds and other unlisted equity investments are managed by ensuring that investments are managed in accordance with stated objectives and by monitoring the performance of the investments.

TCorp examines the sensitivity of the ‘operating result’ and ‘net worth’ attributable to price risk from these investments. The Total State Sector’s exposure to price risk from these investments is set out in the table below. The table reports the estimated sensitivity of 10 per cent (2019: 10 per cent) movement in price to the ‘operating result’ and ‘net worth’ of the Total State Sector.

Total State Sector

2019-20 2018-19 -10% +10% -10% +10% Restated(a) Restated(a)

$m $m $m $m

Operating Result (3,549) 3,549 (3,517) 3,517Net Worth (3,549) 3,549 (3,517) 3,517

(a) Comparatives have been restated on receipt of revised information after the 2018-19 TSSA. A range of sensitivity rates of 5 per cent to 26 per cent was used in the 2018-19 TSSA. In 2019-20 a flat sensitivity rate of 10 per cent has been used. The 2018-19 comparative sensitivity analysis has been amended to use 10 per cent to allow for comparison with 2019-20.

Note 26


General Government Sector – Unit Holdings in TCorpIM Funds

The General Government Sector is primarily exposed to price risk through its unit holdings in TCorpIM Fund Trusts (Note 9). Investments in TCorpIM Funds are held for strategic rather than trading purposes. The funds comprise a series of managed funds which are subject to volatility in their unit prices. Each fund comprises a different underlying type of investment, with associated risks and investment horizons.

TCorpIM Fund investments held by agencies operating in the Total State Sector are eliminated on consolidation of the sector.

The General Government Sector holds units in the following TCorpIM Funds trusts:

General Government Sector 2019-20 2018-19

Trust Investment Sectors Investment

Horizon $m $mCash Fund Cash, money market instruments Up to 1.5 years 195 282 Short Term Income Fund Cash, money market instruments 1.5 years to 3 years 296 191 Medium Term Growth Fund Cash, money market instruments, Australian

and International bonds, listed property, Australian shares

3 years to 7 years 224 290

Long Term Growth Fund Cash, money market instruments, Australian and international bonds, listed property, Australian shares

7 years and over 1,146 1,116

Insurers' Guarantee Fund Investment Trust

Cash, money market instruments, Australian and international bonds, listed property, Australian shares

7 years and over 208 206

Treasury Managed Fund Investment Portfolio

Cash, money market instruments, Australian bonds, listed and unlisted property, Australian, international and emerging market shares

Long Term 9,450 8,393

ICNSW Australian Equities Fund Listed Australian equities 5 years and over 74 113 ICNSW International Equities Fund Listed Global (ex Australia) equities 5 years and over 144 138 ICNSW International Equities Hedged Fund

Listed Global (ex Australia) equities, FX contracts


Emerging Market Shares Fund Emerging market shares 5 years and over 63 63 Unlisted Property Fund Retail, office and industrial property assets 10 years and over 112 122 Unlisted Infrastructure Fund Unlisted Managed Investment Funds 10 years and over 66 65 NSW Infrastructure Future Fund Cash, Australian shares, International

shares, emerging market equities, Australian bonds and investment grade credit

10 years and over 13,845 18,277

Long Service Corporation Investment Facility Trust

Cash, money market instruments, Australian bonds, listed bonds, listed property, Australian and International shares


Alternatives Risk Premium Fund Listed Australian and Global equities, Australian and International bonds, currencies, commodities, derivatives


Social and Affordable Housing Fund Investment Trust

Cash, Australian shares, International shares, emerging market equities, Australian bonds and investment grade credit


Cyclical Growth Australian Share Fund Listed Australian Equities 5 years and over 48 77 Cyclical Growth International Share Fund Listed Global (ex Australia) equities 5 years and over 73 69 Bank Loan Fund Global bank loans 5 years and over 62 37 Emerging Market Debt Fund Emerging market government and corporate

bonds 5 years and over 48 52

NSW Generations (Debt Retirement) Fund Investment Trust

Cash, Australian shares, International shares, emerging market equities, Australian bonds and investment grade credit

10 years and over 11,262 10,884

Absolute Return Multi Asset Class Fund Cash, money market instruments, Australian and International bonds, listed property, Australian shares


Liquidity Cash Fund Cash, money market instruments and Australian bonds

Up to 1.5 years 68 20

Small Cap Australian Share Fund Listed Australian equities 5 years and over 11 14 GGS Total TCorpIM Funds(a) 40,760 43,262

(a) The General Government Sector unit holdings in TCorpIM Funds of $40.8 billion (2018-19: $43.3 billion) comprises of TCorpIM Cash Funds of $191 million (2018-19: $279 million) presented in Note 6: Cash and Cash Equivalents and $40.6 billion (2018-19: $42.9 billion) of TCorpIM Fund investments disclosed as part of Financial Assets at Fair Value included in Note 9: Investments, Loans and Placements.

Note 26


TCorpIM investment facilities are mandatorily measured at FVTPL by the General Government Sector and therefore any change in unit price impacts directly on the operating result. The unit price of each trust is equal to the total fair value of the net assets held by the trust divided by the number of units on issue for that trust. Unit prices are calculated and published daily.

TCorp as trustee for each of the above facilities is required to act in the best interest of the unit holders and to administer the trusts in accordance with the trust deeds. As trustee, TCorp has appointed external managers to manage the performance and risks of each facility in accordance with a mandate agreed by the parties. TCorp has also leveraged off internal expertise to manage certain fixed income assets for the TCorpIM Funds facilities. A significant portion of the administration of the facilities is outsourced to an external custodian.

Investment in the TCorpIM Funds limits the State’s exposure to risk, as it allows diversification across a pool of funds with different investment horizons and a mix of investments.

The General Government Sector’s exposure to price risk from these investments is set out in the table below. The table reports the estimated sensitivity of 10 per cent (2019: 10 per cent) movement in price to the value of the investments of the General Government Sector.

A reasonably possible change is based on the percentage change in unit price (as advised by TCorp) multiplied by the redemption value at 30 June each year for each trust.

Price Risk Sensitivity Analysis of the TCorpIM Funds

Change in Unit General Price Government Sector 2019-20 2018-19 2019-20 2018-19 Trust Restated(a) Restated(a)

% % $m $m

Cash Fund +/-10.0% +/-10.0% 20 28Short Term Income Fund +/-10.0% +/-10.0% 30 19Medium Term Growth Fund +/-10.0% +/-10.0% 22 29Long Term Growth Fund +/-10.0% +/-10.0% 115 112Insurers' Guarantee Fund Investment Trust +/-10.0% +/-10.0% 21 21Treasury Managed Fund Investment Portfolio +/-10.0% +/-10.0% 945 839ICNSW Australian Equities Fund +/-10.0% +/-10.0% 7 11ICNSW International Equities Fund +/-10.0% +/-10.0% 14 14ICNSW International Equities Hedged Fund +/-10.0% +/-10.0% 5 5Emerging Market Shares Fund +/-10.0% +/-10.0% 6 6Unlisted Property Fund +/-10.0% +/-10.0% 11 12Unlisted Infrastructure Fund +/-10.0% +/-10.0% 7 7NSW Infrastructure Future Fund +/-10.0% +/-10.0% 1,385 1,828Long Service Corporation Investment Facility Trust +/-10.0% +/-10.0% 178 151Alternatives Risk Premium Fund +/-10.0% +/-10.0% 3 4Social and Affordable Housing Fund Investment Trust +/-10.0% +/-10.0% 148 122Cyclical Growth Australian Share Fund +/-10.0% +/-10.0% 5 8Cyclical Growth International Share Fund +/-10.0% +/-10.0% 7 7Bank Loan Fund +/-10.0% +/-10.0% 6 4Emerging Market Debt Fund +/-10.0% +/-10.0% 5 5NSW Generations (Debt Retirement) Fund Investment Trust +/-10.0% +/-10.0% 1,126 1,088Absolute Return Multi Asset Class Fund +/-10.0% +/-10.0% 2 4Liquidity Cash Fund +/-10.0% +/-10.0% 7 2Small Cap Australian Share Fund +/-10.0% +/-10.0% 1 1

Total 4,076 4,327

(a) Comparatives have been restated on receipt of revised information after the 2018-19 TSSA. Sensitivity analysis information for each of the TCorpIM investment trusts, using historically based volatility information collected over a 10-year period quoted at two standard deviations (i.e. 95 per cent probability), was used in the 2018-19 TSSA. In 2019-20 a flat sensitivity rate of 10 per cent has been used. The 2018-19 comparative sensitivity analysis has been amended to use 10 per cent to allow for comparison with 2019-20.

The table above shows that the General Government Sector’s dollar exposure to TCorpIM Fund price risk can be relatively significant, particularly for its holdings in the Long Term Growth Fund, Treasury Managed Fund Facilities, NSW Infrastructure Future Fund, NSW Generations Debt Retirement Fund Investment Trust and Long Service Corporation Investment Facility Trust. These funds are underpinned by heavier weightings in share and property growth assets. It should be expected that, while there can be short-term volatility in annual returns, they will return higher long-term returns than the Cash or Short Term Income Fund. In particular, the Treasury Managed Fund investments are held beyond the short-term to reflect the longer-term payment horizon for insurance claims, which can extend beyond many years.

Note 26


Foreign Exchange Risk

The State undertakes transactions denominated in foreign currencies which result in exposures to changes in foreign exchange rates. The State, through its consolidated agencies, has policies and procedures in place and utilises foreign exchange derivatives to minimise foreign exchange risk.

Total State Sector - Securities Denominated in Foreign Currencies

The Total State Sector is exposed to foreign exchange risk through monetary securities denominated in foreign currencies held by TCorpIM Fund Trusts. Foreign exchange risk arises as the value of these securities fluctuate when foreign exchange rates change.

TCorp, as trustee, examines the possible effects of movements in exchange rates against the Australian dollar on the financial position as at the reporting date. The most probable changes in the foreign exchange variables have been selected based on estimations, considering historical changes in the correlation of the Fund’s investments with the relevant benchmark and market volatility.

The Total State Sector’s exposure to foreign exchange risk from these financial assets and liabilities is set out in the table below. The table reports the estimated sensitivity range of 10 per cent movement in exchange rates to the ‘operating result’ and ‘net worth’ of the Total State Sector.

Total State Sector

2019-20 2018-19 -10% 10% -10% 10% Restated(a) Restated(a)

$m $m $m $m


(a) Comparatives have been restated on receipt of revised information after the 2018-19 TSSA. A sensitivity rate of 8 per cent was used in the 2018-19 TSSA. In 2019-20 a sensitivity rate of 10 per cent has been used. The 2018-19 comparative sensitivity analysis has been amended to use 10 per cent to allow for comparison with 2019-20.

Total State Sector - Borrowings at Fair Value

The Total State Sector is exposed to foreign exchange risk through TCorp borrowings issued in foreign currencies and overseas markets undertaken as part of the funding program of the State’s debt.

Foreign exchange risk is managed by TCorp by entering into Australian dollar cross-currency swaps and forward foreign exchange contracts. Forward foreign exchange contracts with clients are covered by corresponding forward exchange contracts with market counterparties.

Note 26


Other Purchase and Sale Commitments

State agencies enter into forward foreign exchange contracts to hedge certain purchase and sale commitments entered in the normal course of business. These contracts cover the purchase of capital equipment and supplies. The following table summarises foreign currency contract cash flows outstanding in Australian dollars for the State at the reporting date.

General Total Government Sector State Sector 2019-20 2018-19 2019-20 2018-19

Currency Contract Value

AUD ($m)Contract Value

AUD ($m)Contract Value

AUD ($m) Contract Value

AUD ($m)Euro 1 148 10 160Japanese Yen 0 0 1 0British Pounds ... 0 1 1US Dollars 137 9 178 31Indian Rupees ... 212 ... 212Chinese Yuan ... 90 ... 90Total 138 460 190 495

This foreign currency risk is not considered to be material in terms of a possible impact on the operating result and total net worth and, as such, a sensitivity analysis has not been completed.

Note 27 and Note 28


Note 27: Trusts Under Management

Trusts under management are held on behalf of beneficiaries and are not controlled by the State. Therefore, in principle, these trusts are not recognised as assets or liabilities on the Statement of Financial Position. However, $357 million (2018-19: $368 million) of these trust funds are invested in TCorpIM Funds.

As the State controls TCorpIM Funds, the portion of these trusts that are invested in TCorpIM Funds are recognised as assets in the State accounts, while liabilities of the same amounts are also recognised to reflect the interest not controlled by the State, as trusts under management are not attributable, directly or indirectly, to the State.

General Total


Trust Funds(a): NSW Trustee and Guardian(b) 2,969 3,077 2,969 3,077Rental Bond Board 1,673 1,623 1,673 1,623State Insurance Regulatory Authority 1,430 1,305 1,430 1,305NSW Treasury Corporation(c) ... ... ... 969The Treasury(d) 211 203 211 203Biodiversity Conservation Trust of NSW 142 122 142 122Department of Customer Service(e) 51 64 51 64Ministry of Health 51 40 51 40Other(f) 233 160 233 160

6,760 6,594 6,760 7,563

(a) There have been restatements of the 2018-19 balances to reflect revised information available after the release of the 2018-19 TSSA. (b) The trust balances exclude certain property assets administered by the NSW Trustee and Guardian as they cannot be reliably measured. (c) T-Corp is no longer required to manage funds in a fiduciary capacity for NSW State Superannuation and Energy Industries Superannuation

Scheme in the 2019-20 financial year. (d) Retail lease security bonds were held in trust by the Department of Industry in the comparative 2018-19 financial year. Upon dissolution of

the Department of Industry, the bonds were subsequently transferred to the management of The Treasury in the current 2019-20 financial year.

(e) Trust funds under the management of the Department of Customer Service were previously managed by the abolished Department of Finance, Services and Innovation in the comparative 2018-19 financial year.

(f) Other' includes trust funds under the management of the Department of Communities and Justice, NSW Police Force, Transport for NSW, Department of Planning, Industry and Environment, Crown Solicitor's Office, Regional NSW and Sydney Metro.

Note 28: Leases

State as a Lessee

Lessee Arrangements Under AASB 16 (from 1 July 2019)

The State has leases of various land, buildings, infrastructure, equipment and motor vehicles. Lease contracts of the State range from periods of 3 to 15 years and may also include extension and termination options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets generally may not be used as security for borrowing purposes.

Extension and termination options are included in a number of property and equipment leases. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the State and not by the respective lessor. In determining the lease term, the State considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.

The State assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Under AASB 16, the State must now recognise lease liabilities (which are reflected as Borrowings on the balance sheet) to make lease payments and right-of-use assets representing the right to use the underlying assets, except for short-term leases and leases of low-value assets.

Note 28


The State recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are initially measured at the amount of initial measurement of the lease liability, adjusted by any lease payments made at or before the commencement date and lease incentives, any initial direct costs incurred, and estimated costs of dismantling and removing the asset or restoring the site.

Right-of-use assets are subsequently measured at cost. They are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:

Land and Buildings 1 to 100 years

Plant and Equipment 1 to 43 years

Infrastructure Systems 12 to 20 years If ownership of the leased asset transfers to the State at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

Right-of-use assets are also subject to impairment. The State assesses, at each reporting date, whether there is an indication that right-of-use assets may be impaired. If any indication exists, or when annual impairment testing of the asset is required, the State estimates the asset’s recoverable amount. When the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. After an impairment loss has been recognised, it is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversals are recognised in the operating result. Right-of-use assets under leases at significantly below-market terms and conditions that are entered into principally to enable the State to further its objectives, are also measured at cost. These right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, subject to impairment. These arrangements are not significant in number or value for the State.

At the commencement date of the lease, the State recognises lease liabilities measured at the present value of lease payments to be made over the lease term. Lease payments include:

fixed payments (including in substance fixed payments) less any lease incentives receivable;

variable lease payments that depend on an index or a rate;

amounts expected to be paid under residual value guarantees;

exercise price of a purchase options reasonably certain to be exercised by the entity; and

payments of penalties for lease termination, if the lease term reflects exercising the termination option. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce/construct recognisable non-financial assets) in the period in which the event or condition that triggers the payment occurs.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for the State’s leases, the State’s incremental borrowing rate is used, being the rate that the State would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a lease modification, including a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

The State’s lease liabilities are included in Note 21: Borrowings at Amortised Cost.

The above does not apply to the State’s short-term lease liabilities of property, plant and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option) and leases of property plant and equipment that are considered to be low value. It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as expense in ‘expenses from transactions’ on a straight-line basis over the lease term.

Note 28


Right-of-Use Assets

The following tables present right-of-use assets that do not meet the definition of investment property.


Land and Buildings

Plant and Equipment


$m $m $m $m

Net Carrying Amount at 1 July 2019 on Adoption of AASB 16 3,722 1,293 ... 5,015

Additions 2,656 260 ... 2,915

Disposals (142) (9) ... (152)

Net Impairment Recognised In the Operating Result (459) (0) ... (459)

Depreciation Expense(a) (539) (260) ... (799)

Other Movements (13) (2) ... (17)

Net Carrying Amount at 30 June 2020 5,225 1,282 ... 6,503

Total State Sector

Land and Buildings

Plant and Equipment


$m $m $m $m

Net Carrying Amount at 1 July 2019 on Adoption of AASB 16 4,536 3,271 185 7,992

Additions 2,709 282 ... 2,991

Disposals (142) (10) ... (152)

Net Impairment Recognised In the Operating Result (478) (0) ... (478)

Depreciation Expense(a) (629) (362) (15) (1,006)

Other Movements (14) 13 2 2

Net Carrying Amount at 30 June 2020 5,982 3,194 172 9,349

(a) Amounts are different from Depreciation expenses disclosed in Note 3: Expenses due to capitalisation of depreciation.

Lease Liabilities

The following table presents liabilities under leases accounted for under AASB 16.

General Total Government Sector State Sector 2019-20 1 July 2019 2019-20 1 July 2019

$m $m $m $m

Lease Liabilities

Current 756 392 863 511 Non-Current 6,329 4,748 8,907 7,323

7,085 5,140 9,770 7,834

The total cash outflow for leases accounted for under AASB16 and AASB117 in 2019-20 is $1,414 million for the General Government Sector and $1,863 million for the Total State Sector.

Note 28


Potential undiscounted future cash outflows relating to extension and termination options of $1,067 million for the General Government Sector and Total State Sector have not been included in the carrying amounts of lease liabilities because it is not reasonably certain that the leases will be extended (or not terminated). During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognised lease liabilities and right-of-use assets of $364 million for the General Government Sector and Total State Sector.

The State in limited circumstances provides residual value guarantees in relation to leases to optimise lease costs throughout the lease term. The State initially estimates and recognises amounts expected to be payable under residual value guarantees as part of the lease liability. When the expected residual value at lease commencement is equal to or higher than the guaranteed amount, the State estimates that it will not pay any amounts under the guarantees. The expected residual values are reviewed to reflect actual residual values achieved on comparable assets and expectations about future prices at the end of each reporting period.

The State is committed to short-term leases at 30 June 2020. These commitments do not expose the State to any material exposures at the 30 June reporting date.

Refer to Note 3: Expenses for interest expense on lease liabilities and expenditure amounts recognised for lease payments not recognised in the carrying amount of lease liabilities.

Further information regarding liquidity risk, including a maturity analysis of lease liabilities is disclosed in Note 26: Financial Instruments.

Sales and Leaseback Transactions

The State has not entered into any significant sale and leaseback transactions in the current financial year ending 30 June 2020 (2018-19: Nil).

Lessee Accounting for Privately Financed Projects

The State has adopted the option to not apply AASB 16 to assets that would be classified as service concession assets in accordance with AASB 1059. The State continues to apply its existing accounting policy TPP06-8 to PFP assets until AASB 1059 becomes effective. Some PFP assets continue to apply the principles of AASB 117 accordingly to TPP06-8.

The following table presents finance lease assets that are included in the carrying amount of Property, Plant and Equipment at Note 14: Property, Plant and Equipment for the 2019-20 reporting period.


Classes of Property, Plant and Equipment

Land and Buildings 2,215 3,320 Plant and Equipment 0 0 Infrastructure Systems 1,021 1,393 3,236 4,714

Note 28


Future minimum lease payments for these PFP arrangements at 30 June 2020 are as follows:


Finance Lease Liabilities 1,352 1,994 1,352 1,994

Future Minimum Lease Payments Under Non-Cancellable Finance Leases: Not Later Than One Year 235 339 Between One and Five Years 705 1,109 Later Than Five Years 1,830 3,013 Minimum Lease Payments 2,769 4,461 Less: Future Finance Charges (1,417) (2,467) Present Value of Minimum Lease Payments 1,352 1,994

Comparative figures for these arrangements are included below as part of finance lease lessee arrangement disclosures provided for the comparative 2018-19 reporting period.

Lessee Arrangements Under AASB 117 (for the Comparative Period Ended 30 June 2019)

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset (or those assets) is not explicitly specified in an arrangement.

Until 30 June 2019, a lease was classified at the inception date as a finance lease or an operating lease. A lease that transferred substantially all the risks and rewards incidental to ownership to the State was classified as a finance lease.

Where a non-current asset was acquired by means of a finance lease, at the commencement of the lease, the asset was recognised at its fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability was established at the same amount. Lease payments were apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges were recognised as Interest in ‘expenses from transactions’ as part of the Statement of Comprehensive Income.

PP&E acquired under finance leases was depreciated over the useful life of the asset. However, if there was no reasonable certainty that the State would obtain ownership by the end of the lease term, the asset was depreciated over the shorter of the estimated useful life of the asset and the lease term.

An operating lease is a lease other than a finance lease. Operating lease payments were recognised as an operating expense in ‘expenses from transactions’ on a straight-line basis over the lease term.

Finance Leases

The following table presents finance lease assets as at 30 June 2019 that are included in the carrying amounts of property plant and equipment in Note 14: Property, Plant and Equipment.


Class of Property, Plant and Equipment

Land and Buildings 2,772 4,157 Plant and Equipment 701 2,610 Infrastructure Systems 1,014 1,391 4,486 8,157

Note 28


Future minimum lease payments payable under non-cancellable finance leases at 30 June 2019 are as follows:


Finance Lease Liabilities 2,590 5,287

2,590 5,287

Future Minimum Lease Payments Under Non-Cancellable Finance Leases:

Not Later Than One Year 448 736 Between One and Five Years 1,589 2,735 Later Than Five Years 3,020 8,591 Minimum Lease Payments 5,057 12,063 Less: Future Finance Charges (2,467) (6,776)

Present Value of Minimum Lease Payments 2,590 5,287

Operating Leases

Future minimum lease payments payable under non-cancellable operating leases at 30 June 2019 are as follows:


2018-19 Restated

2018-19 Restated

$m $m

Future Minimum Lease Payments Under Non-Cancellable Operating Leases: Not Later Than One Year 747 864 Between One and Five Years 1,581 1,903 Later than Five Years 509 933

2,837 3,700

State as a Lessor

The State leases out its infrastructure, land and buildings under finance and operating leases with rentals typically payable monthly. Lease payments for contracts include CPI increases, and in limited circumstances variable lease payments may be evident that depend on an index or rate.

Leases that the State transfers substantially all the risks and rewards incidental to ownership of an asset are classified as finance leases. From 1 July 2019, subleases are classified by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset.

At the lease commencement date, the State recognises a receivable for assets held under a finance lease in the Statement of Financial Position at an amount equal to the net investment in the lease. The net investment in leases is classified as a financial asset measured at amortised cost and equals the lease payments receivable by a lessor and the unguaranteed residual value, plus initial direct costs, discounted using the interest rate implicit in the lease. Finance leases receivable also include residual emerging interests in port and electricity network assets where payment have been received upfront by the State. Where considered necessary to reduce credit risk, the State may obtain guarantees or deposits for the lease term.

Although the State is exposed to changes in the residual value at the end of the current leases, the State typically enters into new operating leases and therefore will not immediately realise any reduction in residual value at the end of these leases. Expectations about the future residual values are reflected in the carrying amount of the underlying leased asset. Payment has also been received upfront for finance lease arrangements where the State has exposure to unguaranteed residual values.

Finance income arising from finance leases is recognised over the lease term, based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the lease. Refer to Note 2: Revenue for interest income recognised for finance leases receivable.

Note 28


An operating lease is a lease other than a finance lease. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in ‘revenue from transactions’ in the Statement of Comprehensive Income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the underlying asset and depreciated over the lease term on the same basis as rental income. Contingent rents are recognised as ‘Revenue From Transactions’ in the period in which they are earned.

Finance Leases

The following table sets out a maturity analysis of leases receivable under finance lease arrangements, showing the undiscounted lease payments to be received after the 30 June 2020 reporting date.


Finance Leases Receivable 1,285 1,456 1,285 1,456

Future Minimum Lease Receipts Under Non-Cancellable Finance Leases: Less Than One Year 47 53 One to Two Years 51 42 Two to Three Years 534 562 Three to Four Years 37 23 Four to Five Years 37 8,599 More Than Five Years 3,409 3,586 Total 4,115 12,865

Unguaranteed Residual Values - Undiscounted 181,272 181,282 (Less) Unearned Finance Income (184,102) (192,691) Net Investment In Finance Leases 1,285 1,456

Unguaranteed Residual Values - Discounted 396 398

The net investment in finance leases increased by $227 million (2018-19: $77 million increase) for the General Government Sector and by $15 million (2018-19: $30 million increase) for the Total State Sector. The change was driven by the recognition of additional finance leases receivable amounts for sub-leasing arrangements on transition to AASB 16 and by continual increases to residual emerging interests in leased port and electricity network assets.

The discounted value of unguaranteed residual values at 30 June 2020 is $396 million (2018-19: $426 million) for the General Government Sector and $398 million (2018-19: $463 million) for the Total State Sector. Residual emerging interests in port assets amounted to $249 million (2018-19: $232 million) for the General Government Sector and Total State Sector, and in electricity network assets amounted to $130 million (2018-19: $122 million) for the General Government Sector and Total State Sector for 2019-20.

Note 28


Gross investment in leases and the present value of minimum lease payments receivable under non-cancellable finance leases as at 30 June 2019 are, as follows:


Finance Leases Receivable 1,058 1,441

1,058 1,441

Future Minimum Lease Receipts Under Finance Leases are Receivable for each of the Following Periods: Not Later Than One Year 17 86 Between One and Five Years 566 602 Later Than Five Years 3,407 12,195 Gross Investment in the Lease 3,990 12,883 Less: Future Interest Revenues (2,932) (11,442)

Present Value of Minimum Lease Payments Receivable and Unguaranteed Residual Value 1,058 1,441

Finance Lease Receivables Resulted In: Present value of the Unguaranteed Residual Values Accruing to Lessors Benefit 426 463 Contingent Rents Recognised as Income 2 2

Operating Leases

Future minimum lease payments receivable (undiscounted) under AASB 16 non-cancellable operating leases as at 30 June 2020 are as follows:


Future Operating Lease Rentals not Recognised in the Financial Statements and Receivable: Not Later Than One Year 231 1,058One to Two Years 217 1,018Two to Three Years 197 1,005Three to Four Years 168 947Four to Five Years 172 1,068More Than Five Years 1,752 6,845

2,736 11,940

Note 28


Future minimum lease payments receivable (undiscounted) under AASB 117 operating leases as at 30 June 2019 are, as follows:

General Total Government Sector State Sector 2018-19 2018-19 Restated(a) Restated(a)

$m $m

Future Operating Lease Rentals not Recognised in the Financial Statements and Receivable: Not Later Than One Year 255 1,062Later Than One Year and Not Later Than Five Years 764 3,937Later Than Five Years 1,229 6,479 2,248 11,478

(a) The 2018-19 amounts for the General Government Sector have been restated to include The Aboriginal Housing Office and the Total State Sector have been restated to include The Aboriginal Housing Office and New South Wales Land and Housing Corporation.

Refer to Note 2: Revenue for operating lease income recognised throughout the reporting period.

Transition Impacts of Adopting AASB 16 Leases

The effect of adopting AASB 16 as at 1 July 2019 (increase/(decrease)) is as follows:

1 July 2019 General Total Government Sector State Sector $m $m

ASSETS

Financial Assets Receivables (9) (8)Investments, Loans and Placements Other Financial Assets(a) 282 114Total Financial Assets 273 106

Non-Financial Assets Property, Plant And Equipment Land and Buildings (651) (961)Plant and Equipment (701) (2,608)Infrastructure Systems (1) (1)Right-of-Use Assets 5,015 7,992Total Non-Financial Assets 3,662 4,422

Total Assets 3,935 4,528

LIABILITIES

Borrowings at Amortised Cost 3,997 4,651Other Provisions 6 6Other Liabilities(b) (66) (66)

Total Liabilities 3,937 4,591

Net Assets (1) (63)

NET WORTH

Total Net Worth (1) (63)

Other Fiscal Aggregates Net Debt 3,715 4,537

Net Financial Liabilities 3,663 4,485

(a) Finance leases receivable are included in the Statement of Financial Position as part of Other Financial Assets (Note 9: Investments, Loans and Placements).

(b) Leasehold incentive liabilities were included in the Statement of Financial Position for the 2018-19 comparative period as part of Other Liabilities (Note 25: Other Liabilities).

Note 28


The State recognised right-of-use assets and additional lease liabilities and finance leases receivable, recognising the impact on net assets in accumulated funds on transition to AASB 16 as at 1 July 2019.

Property plant and equipment under leases previously treated as finance leases under AASB 117 were derecognised. The right-of-use assets arising from these leases were recognised and included in the separate line item together with those arising from leases previously treated as operating leases under AASB 117.

Leasehold incentive liabilities previously recognised under Interpretation 115 were derecognised against the initial carrying amounts recognised for right-of-use assets at 1 July 2019.

Lease liabilities recognised as at 1 July 2019 under AASB 16 can be reconciled to operating lease commitments as of 30 June 2019 as follows:

1 July 2019 General Total Government Sector State Sector $m $m

Restated Operating Lease Commitments as at 30 June 2019 (GST Included) 2,837 3,700

(Less): GST Included in Operating Lease Commitments (235) (281)

Operating Lease Commitments as at 30 June 2019 (GST Excluded) 2,601 3,418

Discounting Adjustment as at 1 July 2019 (76) (216)

Discounted Operating Lease Commitments as at 1 July 2019 2,525 3,202

Add: Finance Lease Liabilities Recognised as at 1 July 2019 2,592 5,281(Less): Finance Lease Liabilities continued to apply the principles of AASB 117 for PFP Arrangements. (1,437) (2,089) (Less): Recognition Exemption for Leases of Low-Value Assets and Short-Term Leases (110) (130) Add: Extension Options Reasonably Certain to be Exercised 1,483 1,505 Add/(Less): Other Adjustments 87 64

Lease Liabilities under AASB 16 as at 1 July 2019 5,140 7,834

The State discounted lease payments using its incremental borrowing rate at 1 July 2019 when measuring lease liabilities for arrangements previously treated as operating leases under AASB 117. The weighted average incremental borrowing rate applied was 1.6 per cent for the General Government Sector and 1.6 per cent for the Total State Sector.

Lease liabilities recognised at 1 July 2019 also include finance lease liabilities previously recognised under AASB 117 and extension / termination option lease payments previously excluded from operating lease commitments as of 30 June 2019.

Payments for short-term leases and leases of low-value items, that were included as part of operating lease commitments as of 30 June 2019, have been excluded from the carrying amount of lease liabilities recognised at 1 July 2019.

Note 29


Note 29: Expenditure Commitments

The following information represents expenditure contracted for at the reporting date, but not recognised in the financial statements.

General Total


Capital Expenditure (including expenditure for private sector financed infrastructure assets): Roads and Maritime Services(a) ... 7,645 ... 7,610Transport for NSW(a)(b) 8,269 1,877 8,268 1,866Sydney Metro(c) 4,805 5,234 4,805 5,234Ministry of Health 2,214 2,363 2,214 2,363Sydney Water Corporation ... ... 1,306 917Department of Education 1,194 1,593 1,194 1,593Infrastructure NSW 734 802 734 802Roads Retained Interest Pty Ltd(d) 709 ... 709 ...New South Wales Land and Housing Corporation ... ... 246 165Water NSW ... ... 143 112Department of Communities and Justice(e) 142 229 142 229Hunter Water Corporation ... ... 121 70NSW Police Force 91 100 91 100Essential Energy ... ... 83 53New South Wales Government Telecommunications Authority 79 114 79 114TAFE Commission 70 59 70 59Royal Botanic Gardens and Domain Trust 39 3 39 3Place Management NSW ... ... 37 2 Zoological Parks Board of New South Wales ... ... 8 35Venues NSW ... ... 3 3Sydney Opera House Trust ... ... 0 30Other 108 115 133 166

18,457 20,134 20,427 21,526

Goods and Services Tax (GST) on Commitments:(f)

GST Input Tax Credits Included in the Above Capital Expenditure Commitments: (c) 1,678 1,830 1,835 1,942

1,678 1,830 1,835 1,942

Capital Expenditure Commitments:

Not Later Than One Year 10,343 10,694 11,546 11,663Later Than One Year and Not Later Than Five Years 8,112 9,250 8,772 9,574Later Than Five Years 2 189 110 289 18,457 20,134 20,427 21,526

(a) Roads and Maritime Services was abolished on 1 December 2019 by the Transport Administration Amendment (RMS Dissolution) Act 2019 No 19. On abolition, the assets, rights and liabilities (including expenditure commitments) were transferred to Transport for NSW.

(b) Transport for NSW’s reduction in capital commitments is due to amounts utilised in 2020 in relation to Rozelle interchange and Western Harbour Tunnel enabling works ($805m), Albion Park Rail ($183m) and the Pacific Hwy upgrade of Woolgoolga to Ballina ($152m).

(c) Sydney Metro’s reduction in capital commitments is due to amounts utilised in 2020 in relation to Metro capital projects such as the City & South West, Northwest, Metro West and Greater West projects. The 2018-19 has been restated to reflect revised information available after the release of the 2018-19 Total State Sector Accounts.

(d) This item represents Roads Retained Interest's (RRIPL) share of captial commitments related to WestConnex (WCX) project works for WCX Stage 2 and WestConnex Stage 3A.

(e) The Department of Justice was abolished on 1 July 2019 by Administrative Arrangements (Administrative Changes – Public Service Statutory Agencies) Order 2019. On abolition, the assets, rights and liabilities (including expenditure commitments) were transferred to the newly established Department of Communities and Justice.

(f) Expenditure commitments are inclusive of GST except for NSW Land and Housing Corporation (LAHC). For LAHC they relate primarily to properties used to provide rental accommodation, which are input taxed activity where GST cannot be claimed from the ATO.

Note 30


Note 30: Contingent Assets and Contingent Liabilities

Contingent assets and contingent liabilities are possible future assets or obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly in the control of the State. Contingent liabilities also include present obligations that do not meet the criteria for recognition as liabilities. In this note, contingent assets and liabilities have been classified into quantifiable (where its financial effect is able to be estimated) or non-quantifiable.

Guarantees are provided to facilitate the provision of certain services and the construction of several infrastructure assets may give rise to contingent liabilities.

Contingent Liabilities

Quantifiable Contingent Liabilities

General Total


Roads Retained Interest Pty Ltd(a) 655 746 655 746(Equity Commitment Deed) Transport for NSW(b)(c) 1,435 ... 1,435 ...Roads and Maritime Services(b)(c) ... 789 ... 789(Land acquisitions, contractual disputes) Department of Communities and Justice(d) 566 545 566 545(Victims Support Scheme, Current Litigation) Other Agencies 220 46 226 60 2,877 2,126 2,882 2,140

(a) The Corporation is a party to the Equity Commitment Deed with the WestConnex Group. There is currently no present obligation to contribute to equity. Depending on the extent of the borrowings, and the future construction profile of the WestConnex Group, a call may be made on the Corporation for an equity contribution.

(b) Transport for NSW has several contractual disputes with an estimated total contingent liability of $399 million and an estimated $1,036 million contingent liabilities due to a number of compulsory property acquisition matters currently under litigation where claims differ from the Valuer General ‘s determined amount.

(c) Roads and Maritime Services was abolished on 1 December 2019 by the Transport Administration Amendment (RMS Dissolution) Act 2019 No 19. On abolition, the assets, rights and liabilities (including Contingent Liabilities) were transferred to Transport for NSW.

(d) The Victims’ Support Scheme (VSS) was created on 3 June 2013 through legislation known as the Victims’ Rights and Support Act 2013. The amount attributable under the VSS could reasonably lie within the range of $314 million to $536 million (2018-19: $300 million to $525 million).

Non-Quantifiable Contingent Liabilities

Details are summarised below of the most significant contingent liabilities which are all fully disclosed in the accounts of individual agencies.

Unless otherwise stated, the General Government contingent liabilities are also applicable to the Total State Sector. Included in these are:

• The State has a contingent liability under the Native Title Act 1993 (Cth). The liability arises because the State has an obligation to pay compensation to native title holders where the State commits an action that extinguishes or impairs the native title holders’ rights. There have been a number of claims filed with the Federal Court under the Native Title Act 1993 (Cth), however it is not possible to reliably estimate the State’s liability in respect of these and any future claims.

Note 30


• The assets of the State in the form of reserved Crown land may be reduced in value by operation of the Aboriginal Land Rights Act 1983 (NSW). Applications may result in land being transferred for no consideration. The State has approximately 36,769 Aboriginal Land Claims (ALC) to review (2018-19: 35,855). As at 30 June 2020, 1,505 ALCs were resolved (2019:1,037). Additional resources have been allocated to the assessment of ALCs with a doubling of staff involved in the assessment process. The increased staffing will enable a more proactive and outcomes focused engagement with Local Aboriginal Land Councils to identify and prioritise claims for determination. The detriment in land values due to potentially successful claims cannot be estimated at this point of time.

• There are a number of significant disputes which have been notified to and by Transport for NSW in relation to its activities.

– Other than the quantifiable contingent liabilities listed above, there are a number of other contractual claims that have arisen from the normal course of business. The amount of the liability that may arise from these claims cannot be measured reliably at this time. There is significant uncertainty as to whether a future liability will arise in respect to these items.

– A statement of claim was filed on 28 August 2018 in the Supreme Court of NSW alleging public and private nuisance as a result of the Sydney Light Rail Project. The proceedings have been brought as representative proceedings. The project specific insurers are managing the conduct of Transport for NSW’s defence. It is not possible at this stage to estimate any potential financial effect in excess of the insurance coverage from these proceedings.

– Transport for NSW has a number of environmental matters emerging from its normal road construction works. There is significant uncertainty as to whether any future liability will emerge in respect of these matters as they are in early state of works, and cannot be reliably measured at this time.

• Claims have been made against the State for compensation for land acquired under the Land Acquisition (Just Terms Compensation) Act 1991. The Land and Environment Court will consider these claims in due course.

• In accordance with the State's Contaminated Land Management Strategy, the State is proactively assessing high risk categories of potentially contaminated land across the whole Crown land portfolio. This process identifies sites where further investigation is required, leading to remediation plans and where appropriate on ground remediation actions with future management determined by way of long-term management plans. There is an ongoing program for the management of contamination and remediation where required. It is not possible to estimate liabilities reliably, as the need for and the type of management and remediation is dependent on future events that cannot be determined at this time.

• The State treats the receipt of unclaimed money to the Consolidated Fund as income. However, claims can be legally lodged for several years after the money is paid into the Fund. Future claims for the return of these monies cannot be estimated and thus, is a contingent liability for the State.

• NSW TAB, a wholly owned subsidiary of Tabcorp, holds a 99-year licence to conduct totalizator betting in New South Wales. The licence included a 15-year ‘exclusivity period’ which expired on 22 June 2013. The State has agreed to extend TAB’s exclusivity licence for a further 20 years to 2033 for $75 million. Under the agreement, the State must compensate Tabcorp if any adverse regulatory event occurs. The amount to be refunded is the initial payment reduced by $2.5 million for each year between the year of receipt and when the adverse regulatory event occurs.

• Recent bushfires across national parks have resulted in extensive property damages, which are being assessed and will require make safe, rectification and replacement works over the next few years. The potential detriment in property values cannot be estimated at this point of time.

• A targeted review designed to identify and remediate, if necessary, instances of under payment of weekly compensation benefits as a result of issues with the calculation of Pre-Injury Average Weekly Earnings (PIAWE) benefits is being considered for the TMF. As this process is just commencing it is not possible to determine if a liability is required or what the quantum of that liability could be for the TMF as of 30 June 2020. As more information becomes available it may be possible to put an estimate on these latent abuse claim liabilities. It is possible that such an estimate is material to the financial statements.

Note 30


• The TSS includes a number of cemetery managers. There is a general expectation on the part of the public that the cemeteries managed by them will be maintained in perpetuity and the State is aware that there may be significant on-going cash outflows for this future maintenance. No liability has crystallised for future maintenance, hence no liability has been recognised.

• State agencies and corporations are subject to various claims and litigation in the normal course of operations. The quantum of these claims cannot accurately be determined.

Warranties, Guarantees and Indemnities

Guarantees have been provided to facilitate the provision of certain services and the construction of several infrastructure assets, which may give rise to contingent liabilities. Unless otherwise stated, the General Government guarantees are also applicable to the Total State Sector.

The major guarantees are:

• Issued securities, borrowing and derivative liabilities of the New South Wales Treasury Corporation with a market value of $99.3 billion (2019: $74.1 billion) have been guaranteed by the NSW Government under the Government Sector Finance Act 2018.

• The State Government has also guaranteed TCorp’s loan facility to NSW Local councils in connection with the “Fit For The Future” reform program. As at 30 June 2020 these loans were valued at $842.6 million (2019: $644.8 million).

• State guarantees given to various organisations under statute mainly relate to certain co-operative housing societies. The maximum exposure as at 30 June 2020 is $19 million (2018-19: $21 million).

• The State made a number of warranties in relation to the sale of Delta Electricity’s Western Assets, Eraring Energy, Vales Point Power Station, Colongra Power Station, Macquarie Generation and the 99-year leases of TransGrid, Ausgrid and Endeavour Energy network assets:

Pre-existing contamination liability

– the State retains the costs for remediating pre-existing contamination at the Eraring, Shoalhaven, Mt Piper, Vales Point, Colongra, Bayswater and Liddell power stations sites to minimum legal standards. Contamination is determined by reference to base line study or studies within certain time restrictions.

General warranties

– under the various Sale and Purchase and Lease transactions, the State has potential liabilities under various warranties, indemnities and guarantees provided to the purchaser and lessees. Warranties are subject to various caps, carve-outs and time restrictions.

Coal haul road liability

– if existing Aboriginal land right claims affect Crown Land titles over the coal haul road from Newstan Colliery to the Eraring Power station, compensation will be payable by the State to the native title holders to negotiate a continued right to use. The State’s obligations end (in respect of each existing Aboriginal Land Claim): 12 months after the date on which the Minister or Court (as applicable) determines that Crown Land subject to an existing Aboriginal Land Claim is not claimable land or an easement or similar for the purposes of the Coal Haul Road is granted to the indemnified party; or the date on which an existing Aboriginal Land Claim is withdrawn or terminated.

Ash dam liability

– as part of the Eraring Sale, the State will pay half the incremental cost of implementing an alternative arrangement for ash disposal if the existing proposal (as at 1 August 2013) for further backfilling at the ash dam cannot be implemented. The State’s liability ceases if the issue is not resolved by 1 August 2023. The State will also retain the costs for remediating ash dam contamination (migration of contamination in water from ash dams) at Vales Point Power Station.

• In addition to the warranties, the State made the following guarantees and indemnities in relation to the sale of Vales Point Power Station, Colongra Power Station and Macquarie Generation:

Note 30


Vales Point Hand Back Deed

– where an option is exercised under the Hand Back Deed, the State will be responsible for the demolition and remediation of Vales Point and the Site Land.

Land remediation indemnity

– the State has indemnified the purchasers in relation to the cost to remediate land at the various power station sites, subject to various conditions and time frames.

Barnard River Scheme native title indemnity

– the State has indemnified AGL for costs related to any native title claims affecting a parcel of Crown land related to the Barnard River Scheme.

• The State has guaranteed the obligations and performance of various statutory authorities under contracts with private sector parties. These guarantees are considered unlikely to ever be exercised and, in some cases, are limited to financial obligations only. The current guarantees in place are:

– Cross City Tunnel – Eastern Creek Alternative Waste Treatment

Plant (The Crown Entity holds a guarantee, a contingent asset, which fully offsets this contingent liability)

– Eastern Distributor – Illawarra and Woronora Water Treatment

Plant – Lane Cove Tunnel – Long Bay Prison and Forensic Hospital – M2 Motorway – Macarthur Water Filtration Plant – Mater Hospital – New Grafton Correctional Centre – New Intercity Fleet – Newcastle Integrated Service Operator – North West Rail Link – Operations, Trains

and Systems – NorthConnex – Northern Beaches Hospital

– Olympic Multi-Use Arena – Orange Hospital Redevelopment – Prospect Water Filtration Plant and

Treatment Works – Regional Rail – Royal North Shore Hospital Redevelopment – Suburban Rolling Stock – Sydney Growth Trains – Sydney Harbour Tunnel – Sydney International Convention, Exhibition

and Entertainment Precinct – Sydney Light Rail – Sydney Metro City & Southwest:

Operations, Trains and Systems, Trains & Systems

– VISY Mill: Tumut Timber Supply Agreement – WestConnex – Western Sydney Orbital (Westlink M7

Motorway)

• NSW Treasury Corporation has undertakings for other government authorities for their performance under contracts with third parties. At the reporting date they were valued at $65.4 million (2018-19: $74.7 million).

• The State bears the risk of the employer’s superannuation guarantee contributions being insufficient to fund the defined employee benefits (in respect of past and future service liabilities) for certain ex-public sector employees following the State’s decision to sell a number of former State controlled public trading enterprises (PTE) in past reporting periods. The State must pay the contribution shortfall on an annual basis and is obliged to make good any employer reserve shortfall upon the insolvency of the employer. Indemnities have also been provided to the private sector employer in respect of loss suffered, for example, from non-payment of an unfunded amount or tax losses suffered due to payments by the State.

• The State has provided a Deed of Indemnity to the directors and designated senior management of some state-owned corporations (SOC). This deed indemnifies them against claims and liabilities in connection with the Energy Industry Reform Transactions (Transaction Process). The directors and designated senior management covered by this indemnity are the directors and designated senior management of Essential Energy and the former directors and designated senior management of Eraring Energy, Ausgrid, Macquarie Generation, Endeavour Energy and Delta Electricity. To the extent permitted by law, the indemnity covers each indemnified party, in their capacity as directors or senior management, against:

Note 30


– civil liability arising in respect of the Transaction Process if such liability is or was not due to conduct which involved a lack of good faith on the part of the indemnified party, and

– costs in defending proceedings, whether civil or criminal, in which judgement is or was given in favour of the indemnified party or in which the indemnified party is or was acquitted or where the proceedings are discontinued or in connection with any application in relation to a proceeding in which a court grants or granted relief to the indemnified party.

The indemnified parties have a duty to maintain in force comprehensive directors’ and officers’ insurance policies which cover all of the risks indemnified by the State under the indemnities until:

– the completion of the Transaction Process, and

– for seven years following the completion of the Transaction Process for any acts or omissions of the Indemnified Party occurring before completion of the Transaction Process.

The indemnity does not apply in respect of a liability which arises out of any act or omission on the part of the indemnified party that involves, among others as detailed in the Deed of Indemnity, gross negligence, recklessness and conduct contrary to any written direction or instructions to the indemnified party made by or on behalf of the State.

It is not possible to estimate the amount of contingent liability exposure at this time. There are no known claims as at the reporting date.

• In entering the 99-year lease of land and fixtures at Port Kembla, Port Botany and Enfield and 98-year lease at Port of Newcastle

– the State has indemnified the Port lessees in respect of pre-existing environmental damage or contamination at relevant sites (no known claims as at the reporting date) and

– the State has guaranteed limited compensation to financiers if the Port Leases are terminated for any reason.

• State owned electricity distributors provide guarantees to regulatory and statutory authorities to the value of $20.9 million (2018-19: $22.2 million).

• The State Government’s motor vehicles are financed by an internal arrangement managed by StateFleet and funded by TCorp. The facility is funded through a portfolio of debt with a modified duration of around 3 years. There is an interest rate exposure on a principal of $46 million as at 30 June 2020 (2018-19: $106 million).

Note 30


• State’s Fire and Rescue has undertaken site assessments at its training centres located in Armidale, Albion Park, Deniliquin, Alexandria and Greenacre. The assessment results confirmed the presence of perfluorooctane sulfonate (PFOS), perfluorooctanoic acid (PFOA) and Perfluorohexane Sulfonic Acid (PFHxS) chemicals. Plans for remediation are now in place. Leased properties will be remediated in accordance with these plans and subsequent reimbursement of the costs will be sought from the insurer. The final remediation costs of the impacted properties owned by the State remain uncertain.

• In January 2019, control of Allianz Stadium was handed over to Infrastructure NSW to commence demolition for the redevelopment of a new stadium funded by the NSW Government. As such, events previously hosted at Allianz Stadium have been relocated to either the Sydney Cricket Ground and other venues within NSW. During the redevelopment period of the Sydney Football Stadium the Trust has entered contractual commitments for relocation costs, disruption costs and training facilities for sports partners/tenants and reinstatement of member and ancillary facilities. In June 2018, TCorp approved an increase in the Trust’s global borrowing capacity in order to fund these costs.

• On 29 March 2019 the Myuna Bay Sport and Recreation Centre was closed due to safety concerns relating to the nearby Eraring Ash Dam. The Office of Sport has been advised by Origin Energy Limited that if the dam wall breaks in the event of a major earthquake, there is a significant risk to the Myuna Bay Sport and Recreation Centre. The Minister has requested an independent review of the Origin Energy report. On 12 December 2019 it was announced that the decision to close the Centre was reasonable and that the Centre would be permanently closed. This has resulted in the Centre buildings value being impaired to nil (impact $9.88 million) and the land impaired to $0.6 million (impact $2.9 million). The financial impacts of these impairments have been recognised in the financial statements of the State Sporting Venues Authority. Negotiations are continuing with Origin Energy Ltd over compensation related to the closure and building a new facility at a different location. The financial impact on the Office relating to continued operating costs incurred while the new facility is built, related forgone revenue, and costs relating to the environmental management and making good of the closed site are still to be quantified and agreed on with Origin Energy as at 30 June 2020.

Contingent Assets

Contingent assets exist in respect of guarantees received and from pending litigation. These include:

• As a result of the collapse of HIH Insurance Limited, the State assumed liabilities of approximately $650 million. This was in respect of building warranty and third-party motor insurance. An independent actuary estimated the discounted present value of the outstanding liability to be $4.1 million as at 30 June 2020 (2018-19: $7 million). The liquidators of HIH Insurance Limited currently intend to distribute various percentages up to ‘more than 50 per cent’ depending upon the scheme company. In 2019-20, the State did not receive liquidators’ distributions. (2018-19: Nil).

• As part of the HACP program, there were 15 properties that the AHO does not have definitive control over as at 30 June 2020 (2019 – 40 properties). As a result, they will not be recognised until such time as full control is established. The estimated value of these properties is $4.8m. (2018-19: $20.3m).

• The Newcastle Port Corporation has submitted a business interruption claim for the financial impact resulting from Federal and State Government restrictions on the movement of cruise ships and associated businesses due to the COVID-19 pandemic. There are three financial categories being analysed and reviewed (Cruise ship revenues (i.e. pilotage, navigation, site occupancy), rental losses from impacted tenants; and additional costs incurred to manage NSW Health and Safety directives). Based on the preliminary review analysis undertaken by the insurance company, an interim insurance recovery payment has been approved and received by 30 June 2020. In addition to the approved interim insurance recovery payment, the State may receive further insurance recovery payments. However, as the full financial impact of the COVID-19 pandemic is still uncertain, the State is not able to reliably estimate the amount of any future insurance recovery payments which is dependent on the period of the Federal Government ban on cruise ships and any offsetting cost savings the insurer may take into consideration in calculating these future payments. Accordingly, a contingent asset has not been recognised.

Note 31


Note 31: Events after the Reporting Period

COVID-19

As at 30 June 2020, the State has assessed the impact of COVID-19 on the fair value of its non-current physical and financial assets. These assets include land, buildings, infrastructure, receivables, lease liabilities and lease assets. This was based on historical sales information, expectation of macroeconomic conditions and outlook at the time of assessment. The impact of COVID-19 on the commercial property market has resulted in the impairment of right -of-use assets of $459 million as shown in note 4: Other Economic Flows Included in the Operating Result. Given the uncertainty around the continued impact of COVID-19, it is possible that post 30 June 2020 there may be some new evidence that impacts this fair value assessment materially.

Wages Policy

On 1st October 2020 the NSW Industrial Relations Commission (IRC) made the determination to award a 0.3% wage increase in FY2020-21 to approximately 170,000 employees on certain awards and a 12-monthly pay pause in 2020-21 for Senior Executives, Members of Parliament and Other Public Office Holders. This matter was being considered by the IRC prior to 30 June 2020. The impact of the IRC decision is a decrease of $214 million in the defined benefit superannuation liability and a decrease of $136 million in the long service leave liability as at 30 June 2020. These amounts are not reflected in these accounts, as this change is not material to the State.

In addition to the above, on 3rd November it was announced that the public sector wage increases will be capped at 1.5 per cent which aligns with the average underlying inflation forecast. This does not impact the 30 June 2020 balances as the matter was not being considered at this time, but will be included in the 2021 State Budget.

Sale of WestConnex

On 6 November 2020, the NSW Government approved the sale of the State’s remaining 49 per cent stake in WestConnex. An estimate of the financial impact cannot be made at this stage. Proceeds from any potential transaction will be invested into the NSW Generations Fund as required under the NSW Generations Fund Act 2018.

Changes to Reporting Entities

There have been several changes to reporting entities as a result of the Administrative change orders. On 1 July 2020 Rail Corporation New South Wales (RailCorp) was renamed as Transport Asset Holding Entity of New South Wales (TAHE) and converted to a statutory State Owned Corporation pursuant to the Transport Administration Act 1988 (TAA) and the State Owned Corporations Act 1989.

Under the Administrative Arrangements (Administrative Changes—Regional NSW and Independent Planning Commission) Order 2020, the Office of the Independent Planning Commission (IPC) was established effective 1 July 2020.

Note 32


Note 32: Restatement/Corrections to Prior Years

(a) Road Infrastructure Systems

The abolished Roads and Maritime Services recognised a prior period adjustment to revise the fair value of road assets in the comparative 2018-19 financial year. The adjustment was processed due to following:

Some culverts, a component of the road assets, were duplicated in the 2018-19 valuation as they cover two or more road segments. The duplicate culverts were retrospectively removed from the valuation, and this decreased fair value by $290 million as at 30 June 2019.

Retaining walls were valued in the 2017-18 financial year using inventory information from the slope risk management system of the agency. A review performed in the current financial year determined that this inventory information was unsuitable for financial reporting purposes. An alternative percentage cost assumption was used to determine the fair value of the retaining walls retrospectively. This has resulted in the decrease in the fair value of road assets by $812 million as at 30 June 2019.

For both the General Government Sector and Total State Sector, these adjustments in aggregate for 2018-19 have resulted in the decrease in infrastructure systems property, plant and equipment by $1,102 million, a cumulated decrease in reserves (asset revaluation reserve) by $1,167 million and an increase in accumulated funds by $66 million as a result of decreases in depreciation expense. Total comprehensive income for 2018-19 decreased by $127 million due to the decrease of depreciation expense of $52 million offset by decreases in revaluation increments of $179 million recognised in other comprehensive income – other economic flows. Opening total net worth at 1 July 2018 decreased by $976 million by this adjustment.

(b) ANZ Stadium

The Sydney Olympic Park Authority (SOPA) revised the accounting treatment applied for ANZ Stadium (the Stadium) during the preparation of its 2019-20 financial statements. The Stadium was originally funded, developed and operated by the private sector. The State acquired ownership of the stadium on 1 July 2016 from the private sector company holding the operating lease for the Stadium. Assets and liabilities were transferred and leased to PNFC agency Venues NSW on the acquisition date. The Stadium was accounted for as right to receive infrastructure under TPP 06-8 Accounting for Privately Financed Projects (TPP 06-8) during the comparative 2018-19 financial year. The prepaid upfront contribution was recognised progressively over the concession period and the emerging right to receive the Stadium was recognised as income and a non-current asset throughout the lease period. On consolidation of the TSS, the emerging right to receive infrastructure was eliminated and re-instated as property plant and equipment in the PNFC sector. SOPA reassessed that as a result of the government buyback at 1 July 2016, a partnership between the public purchaser (SOPA) and the private sector does not exist, and that TPP 06-8 is no longer applicable from that date.

Adjustments to the 2018-19 comparatives of the General Government Sector have resulted in an increase to property, plant and equipment of $858 million offset by a $442 million decrease to the right to receive privately financed infrastructure included `in other non-financial assets. The above mentioned consolidation adjustment has also been reversed as the General Government Sector is now recognising property, plant and equipment. This has resulted in a decrease to the General Government Sector investment in other public sector entities of $417 million at 30 June 2019 (due from the difference in the value of right to receive privately financed infrastructure and the fair value of the property plant and equipment previously recognised in the Total State Sector).

These adjustments did not have a net impact on the 2018-19 total comprehensive income and opening net worth at 1 July 2018 for both the General Government Sector and Total State Sector.

Note 32


(c) Classification of Revenue from Transactions

The State has reviewed the classifications of revenue from transactions as part of the implementation of AASB 15, AASB 1058 and AASB 16 at 1 July 2019. The State has reclassified the following revenues in the Consolidated Statement of Comprehensive Income resulting from this review:

Licence fees revenue accounted for under AASB 15 have been reclassified as sale of goods and services in 2019-20. The 2018-19 financial year comparatives for the General Government Sector and Total State Sector have been restated for this item with sale of goods and services increasing by $623 million, taxation income decreasing by $417 million and fines, regulatory fees and other revenues decreasing by $207 million.

AASB 15 and AASB 1058 revenues recognised in fines, regulatory fees and other revenues in the comparative 2018-19 financial year have been reclassified to sale of goods and services in 2019-20. Sale of good and services have increased and other revenue has decreased by $132 million in the 2018-19 restated comparatives for the General Government Sector and $299 million for the Total State Sector.

Levies on compulsory third party insurance premiums collected by licensed insurers were presented with sale of goods and services revenue in the comparative 2018-19 financial year. The State has reclassified these levies as taxation income in 2019-20. The 2018-19 financial year comparatives for the Total State Sector have been restated for this item with taxation income increasing and sale of goods and services revenue decreasing respectively by $516 million.

• These adjustments did not have a net impact of the Consolidated Statement of Cash Flows with adjustments to 2018-19 operating cash inflows netting off against each other to zero. These reclassifications have been corrected by restating each of the affected financial line items for the prior periods as follow.

Note 32


Consolidated Statement of Comprehensive Income (Extract)

For the Financial Year Ended 30 June 2019 General Total Government Sector State Sector

2018-19Actual Adjustment

2018-19Restated

2018-19 Actual Adjustment

2018-19Restated

FROM CONTINUING OPERATIONS Note $m $m $m $m $m $m

Revenue from Transactions Taxation (c) 31,443 (417) 31,026 30,940 100 31,040Sale of Goods and Services (c) 8,990 755 9,745 14,819 406 15,225Fines, Regulatory Fees and Other (b) (c) 5,051 (371) 4,679 5,739 (505) 5,234Total Revenue from Transactions 81,690 (34) 81,655 86,093 ... 86,093


Depreciation and Amortisation (a) (b) 5,192 (21) 5,171 8,016 (52) 7,964Total Expenses from Transactions 80,471 (21) 80,450 87,881 (52) 87,828

Transactions from Discontinuing Operations 0 ... 0 8 ... 8

NET RESULT FROM TRANSACTIONS - NET OPERATING BALANCE (BUDGET RESULT FOR THE GENERAL GOVERNMENT SECTOR) 1,219 (13) 1,206 (1,780) 52 (1,727)


Other Economic Flows - included in Operating Result 11,117 ... 11,117 8,123 ... 8,123

OPERATING RESULT 12,335 (13) 12,322 6,343 52 6,395

OTHER ECONOMIC FLOWS - OTHER COMPREHENSIVE INCOME Items that will not be Reclassified to Operating Result Revaluations (a) (b) 7,205 (51) 7,154 7,454 (179) 7,275Net Gain/(Loss) on Equity Instruments at Fair Value through Other Comprehensive Income (b) (7,888) (62) (7,950) (618) ... (618)Other Economic Flows - Other Comprehensive Income (14,259) (113) (14,372) (8,267) (179) (8,446)

COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS (1,924) (127) (2,050) (1,924) (127) (2,050)


COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS (1,924) (127) (2,050) (1,924) (127) (2,050)

Less: Net Other Economic Flows 3,142 113 3,256 144 179 323NET OPERATING BALANCE 1,219 (13) 1,206 (1,780) 52 (1,727)


Less: Depreciation and Amortisation (a) (b) (5,192) 21 (5,171) (8,016) 52 (7,964) Plus: Other Movements in Non-Financial Assets Other (a) (4) (34) (38) 357 ... 357 Equals Total Net Acquisition of Non-Financial Assets 10,498 (13) 10,485 12,816 52 12,868

EQUALS: NET LENDING/(BORROWING) (9,280) ... (9,280) (14,595) 0 (14,595)

Note 32


Consolidated Statement of Financial Position (Extract)

As at 30 June 2019

30 June 2019 General Total Government Sector State Sector 30 June 30 June 30 June 30 June 2019 2019 2019 2019 Actual Adjustment Restated Actual Adjustment Restated


ASSETS Financial Assets Equity Investments Investments in Other Public Sector Entities (b) 98,990 (417) 98,573 ... ... ...

Total Financial Assets 169,907 (417) 169,490 101,099 ... 101,099

Non-Financial Assets Property, Plant and Equipment Land and Buildings (b) 89,963 784 90,748 166,346 ... 166,346 Plant and Equipment (b) 12,088 74 12,162 18,075 ... 18,075 Infrastructure Systems (a) 119,291 (1,102) 118,190 167,936 (1,102) 166,835Other Non-Financial Assets (b) 6,707 (442) 6,266 6,449 ... 6,449

Total Non-Financial Assets 232,375 (685) 231,690 366,601 (1,102) 365,499

TOTAL ASSETS 402,282 (1,102) 401,181 467,699 (1,102) 466,598

TOTAL LIABILITIES 152,110 ... 152,110 217,528 ... 217,528

NET ASSETS 250,172 (1,102) 249,070 250,172 (1,102) 249,070

NET WORTH

Accumulated Funds (a) (b) 75,367 355 75,722 92,438 66 92,503Reserves (a) (b) 174,804 (1,456) 173,348 157,734 (1,167) 156,567

TOTAL NET WORTH 250,172 (1,102) 249,070 250,172 (1,102) 249,070

OTHER FISCAL AGGREGATES Net Debt (10,401) ... (10,401) 23,909 ... 23,909

Net Financial Liabilities 81,194 ... 81,194 116,429 ... 116,429

Note 32


As at 1 July 2018

1 July 2018 General Total Government Sector State Sector 1 July 1 July 1 July 1 July 2018 2018 2018 2018 Actual Adjustment Restated Actual Adjustment Restated


ASSETS Financial Assets Equity Investments Investments in Other Public Sector Entities (b) 112,911 (355) 112,556 ... ... ...

Total Financial Assets 173,228 (355) 172,873 89,666 ... 89,666

Non-Financial Assets Property, Plant and Equipment Land and Buildings (b) 83,390 694 84,084 161,627 ... 161,627 Plant and Equipment (b) 10,941 66 11,007 17,367 ... 17,367 Infrastructure Systems (a) 102,147 (976) 101,171 158,158 (976) 157,182Other Non-Financial Assets (b) 7,426 (405) 7,021 6,594 ... 6,594

Total Non-Financial Assets 208,252 (621) 207,630 351,384 (976) 350,408

TOTAL ASSETS 381,480 (976) 380,503 441,051 (976) 440,075

TOTAL LIABILITIES 129,385 ... 129,385 188,956 ... 188,956

NET ASSETS 252,095 (976) 251,119 252,095 (976) 251,119

NET WORTH Accumulated Funds (a) (b) 76,243 367 76,610 99,680 12 99,692Reserves (a) (b) 175,852 (1,343) 174,509 152,415 (988) 151,427

TOTAL NET WORTH 252,095 (976) 251,119 252,095 (976) 251,119

OTHER FISCAL AGGREGATES Net Debt (11,195) ... (11,195) 15,762 ... 15,762

Net Financial Liabilities 69,068 ... 69,068 99,289 ... 99,289

Note 32


Consolidated Statement of Cash Flow (Extract)

For the Financial Year Ended 30 June 2019 General Total Government Sector State Sector

2018-19Actual Adjustment

2018-19Restated

2018-19 Actual Adjustment

2018-19Restated


CASH FLOWS FROM OPERATING ACTIVITIES Receipts

Taxation (c) 31,020 (417) 30,603 30,536 99 30,636 Sale of Goods and Services (c) 9,360 548 9,908 15,553 199 15,752 Other (c) 12,226 (132) 12,094 13,880 (299) 13,581

Total Receipts 86,830 ... 86,830 92,554 ... 92,554

Total Payments (79,502) ... (79,502) (84,037) ... (84,037)

NET CASH FLOWS FROM OPERATING ACTIVITIES 7,328 ... 7,328 8,517 ... 8,517

CASH FLOWS FROM INVESTING ACTIVITIES Net Cash Flows from Investments in Non-Financial Assets (17,635) ... (17,635) (22,492) ... (22,492)

Net Cash Flows from Investments in Financial Assets (Policy Purposes) 15,685 ... 15,685 16,316 ... 16,316

Net Cash Flows from Investments in Financial Assets (Liquidity Purposes) (13,875) ... (13,875) (15,508) ... (15,508)

NET CASH FLOWS FROM INVESTING ACTIVITIES (15,825) ... (15,825) (21,684) ... (21,684)

CASH FLOWS FROM FINANCING ACTIVITIES NET CASH FLOWS FROM FINANCING ACTIVITIES 5,050 ... 5,050 8,164 ... 8,164

NET INCREASE IN CASH AND CASH EQUIVALENTS (3,448) ... (3,448) (5,003) ... (5,003)

Opening Cash and Cash Equivalents 5,417 ... 5,417 13,969 ... 13,969Reclassification of Cash Equivalents and Other Adjustments (1) ... (1) 12 ... 12

CLOSING CASH AND CASH EQUIVALENTS 1,969 ... 1,969 8,979 ... 8,979


Net Cash Flows from Operating Activities 7,328 ... 7,328 8,517 ... 8,517Net Cash Flows from Investments in Non-Financial Assets (17,635) ... (17,635) (22,492) ... (22,492)

CASH SURPLUS/(DEFICIT) (10,307) ... (10,307) (13,975) ... (13,975)

Note 33


Note 33: Related Party Disclosures

Key management personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling the activities of the State. As New South Wales (NSW) Cabinet is the decision making body for the State, all NSW Cabinet Ministers are considered KMP of the State. Information on KMP of each individual agency can be found in individual agency accounts. Only Cabinet exercises the role of KMP over the whole State.

Key Management Personnel Compensation

KMP compensation is as follows:

Total Total State Sector State Sector

2019-20 2018-19 $000 $000

KMP Compensation Comprises: Short-term Employee Benefits Salaries 6,373 6,339Other Monetary Allowances 2,917 2,880Non-monetary Benefits 2,111 2,358Post-employment Benefits 647 673

Total KMP Compensation 12,047 12,249

Related Party Transactions

As a KMP of the State, each Cabinet Minister is considered a related party to all NSW government-controlled entities. The definition of related parties extends to each Cabinet Minister’s close family members and entities controlled or jointly controlled by the Cabinet Minister and/or close family members.

During the year, there were no material transactions with the Cabinet Ministers, their close family members or entities controlled or jointly controlled thereof.

Note 34


Note 34: Budgetary Information on 2019-20 General Government Sector Financial Statements

The budgeted amounts are drawn from the original 2019-20 Budget presented, on 18 June 2019, to Parliament. The budgeted financial statements are presented consistent with AASB 1055 Budgetary Reporting.

The NSW General Government Statement of Comprehensive Income for the Year Ended

30 June 2020

Original Budget Actual

Budget Variance

$m $m $m

Revenue from Transactions Taxation 31,841 29,941 (1,900)Grants and Subsidies Commonwealth General Purpose 18,685 18,073 (612) Commonwealth Specific Purpose Payments 10,431 11,278 847 Commonwealth National Partnership Payments 2,888 3,886 998 Other Grants and Subsidies 999 1,068 69Sale of Goods and Services 9,762 8,713 (1,049)Interest 333 364 31Dividend and Income Tax Equivalents from Other Sectors 1,877 1,354 (523)Other Dividends and Distributions 2,001 2,426 425Fines, Regulatory Fees and Other 5,498 4,262 (1,236)

Total Revenue from Transactions 84,316 81,367 (2,949)


Employee 34,266 35,555 1,289Superannuation Superannuation Interest Cost 1,079 882 (197) Other Superannuation 3,151 3,288 137Depreciation and Amortisation 6,110 5,948 (162)Interest 2,278 2,084 (194)Other Operating 20,815 23,156 2,341Grants and Subsidies Recurrent Grants and Subsidies 14,828 16,369 1,541 Capital Grants 773 1,001 228

Total Expenses from Transactions 83,300 88,283 4,983

TRANSACTIONS FROM DISCONTINUING OPERATIONS ... ... ...NET RESULT FROM TRANSACTIONS

NET OPERATING BALANCE (BUDGET RESULT FOR THE GENERAL GOVERNMENT SECTOR) 1,016 (6,916) (7,932)

Note 34


The NSW General Government Statement of Comprehensive Income for the Year Ended

30 June 2020 (continued)


Budget Variance

$m $m $m

NET OPERATING BALANCE 1,016 (6,916) (7,932)


Gain/(Loss) from Other Liabilities 11 (201) (212)Other Net Gains/(Losses) 435 (2,553) (2,988)Share of Earnings/(Losses) from Equity Investments (excluding Dividends) ... 46 46Dividends from Asset Sale Proceeds (0) 31 31Deferred Income Tax from Other Sectors 15 (123) (138)Other 40 (212) (252)

Other Economic Flows - included in Operating Result 501 (3,013) (3,514)

OPERATING RESULT 1,517 (9,929) (11,446)


Items that will not be reclassified to operating result

Revaluations 2,811 4,263 1,452Share of Associate's Other Comprehensive Income/(Loss) that will not be Reclassified Subsequently to Operating Result ... ... ...Actuarial Gain/(Loss) from Superannuation 1,953 (673) (2,626)Net Gain/(Loss) on Equity Instruments at Fair Value through Other Comprehensive Income (1,346) (4,979) (3,633)Deferred Tax Direct to Equity 85 15 (70)

Items that may be reclassified subsequently to operating result Net Gain/(Loss) on Financial Instruments at Fair Value ... (8) (8)Share of Associate's Other Comprehensive Income/(Loss) that may be Reclassified Subsequently to Operating Result ... (243) (243)Other (97) 1,171 1,268Other Economic Flows - Other Comprehensive Income 3,406 (454) (3,860)

COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS 4,923 (10,382) (15,305)


COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS 4,923 (10,382) (15,305)

Less: Net Other Economic Flows (3,907) 3,466 7,373

NET OPERATING BALANCE 1,016 (6,916) (7,932)


Purchases of Non-Financial Assets 19,855 18,070 (1,785) Sales of Non-Financial Assets (1,031) (639) 392 Less: Depreciation (6,110) (5,948) 162 Plus: Change in Inventories (17) 839 856 Plus: Other Movements in Non-Financial Assets Assets Acquired using Finance Leases 2,490 2,915 425 Other 336 (92) (428) Equals Total Net Acquisition of Non-Financial Assets 15,523 15,145 (378)

EQUALS: NET LENDING/(BORROWING) (14,507) (22,061) (7,554)

Note 34


Analysis of the General Government Sector Results

Significant variances between the original budgeted amounts and the actual amounts disclosed in the financial statements are explained below.

Net Operating Balance (Budget Result)

The budget result for the financial year ended 30 June 2020 was a deficit of $6.9 billion, $7.9 billion lower than the 2019-20 original budget forecast surplus of $1.0 billion.

An analysis of the result compared to the original budget is outlined below.

Total Revenues

Total revenues were $2.9 billion lower than the original budget as outlined below.

Taxation

Taxation was $1.9 billion lower than the original budget mainly due to:

• Payroll tax, which was $1.3 billion lower than the original budget, due to employment being weaker than anticipated at Budget as a result of COVID-19 and a 25% discount for taxpayers with payrolls up to $10 million. The relief measure introduced by the NSW Government to defer annual return lodgement and payments until October 2020 has also impacted the ability to recognise payroll tax in 2019-20.Gambling and betting taxes, which were $424 million lower than at the 2019-20 Budget, primarily due to venue closures, as a result of COVID-19 Public Health Orders in place from March 2020 through till the end of the financial year.

• A reclassification of certain budgeted taxes, mainly motor vehicles related, from Taxation to Sale of Goods and Services ($406 million).

• Land tax was $62 million below expectations at the 2019-20 Budget, reflecting lower than forecast assessment values.

These were offset by higher than expected results in:

• Other taxes and levies, which were higher than in the 2019-20 Budget by $243 million. This was mainly due to the movement in outstanding contributions to the Dust Diseases Compensation Scheme based on recent liability valuations.

• Transfer duty was $67 million higher than expected at the 2019-20 Budget, with slightly stronger than anticipated residential transaction volumes and prices growth being partially offset by lower duties on very large commercial property transactions.


Grants and subsidies revenue was higher than the original budget by $1.3 billion mainly due to the following:

• Commonwealth national partnership payments, which were $998 million higher than in the 2019-20 Budget, primarily driven by $639 million Natural Disaster Relief grant payments, and $387 million accounting adjustments mainly due to the impact of AASB 1058 – Income Recognition on grants.

• Commonwealth specific purpose and other payments, which were $847 million higher than in the 2019-20 Budget. This was primarily driven by an $813 million COVID-19 National Partnership Agreement grant payment to support the Health cluster due to COVID-19 measures.

These increases were partially offset by lower than expected results in:

• Commonwealth general purpose grants, which mainly comprise of GST, were $612 million lower than expected at the 2019-20 Budget. Lower payments were largely due to downward GST pool revisions forecast in the Commonwealth 2019-20 Mid-Year Economic and Fiscal Outlook.


Sale of goods and services includes revenue from the use of government assets as well as revenue generated by agencies in their normal trading activities.

Note 34


Sale of goods and services was lower than in the 2019-20 Budget by $1.0 billion, mainly attributable to:

Lower fees for service of $1.1 billion paid to Transport for NSW and Sydney Metro from the Public Non Financial Corporation Sector for major rail projects, due in part to the transfer of Sydney Metro projects into the General Government (GG) Sector. This impact was largely offset by a corresponding decrease in Other Operating Expenses.

Sale of goods and services in the Education cluster was lower than in the 2019-20 Budget by $290 million due to lower than expected parental voluntary contributions. These contributions are effectively donations and can therefore be unexpectedly volatile.

Sale of goods and services in Health was lower than in the 2019-20 Budget by $187 million due to the COVID-19 impact on activities and the reduced revenue from private health insurers that no longer paying the single room rate.

These decreases were partially offset by the recognition of regulatory fees and fines (mainly relating to motor vehicles) that had originally been budgeted within Taxation and Fines, Regulatory Fees and Other ($652 million).

Interest Income

Interest income includes returns on advances to public non-financial corporation enterprises, along with returns on deposits held with NSW Treasury Corporation and other financial institutions.

Interest income was higher than in the 2019-20 Budget by $31 million mainly due to higher than expected cash balances held in the Treasury Banking System.

Financial Distributions (Dividends and Income Tax Equivalents)

Dividends and income tax equivalent payments are paid by commercial government businesses to ensure competitive neutrality with the private sector and encourage these businesses to make commercial investment decisions.

Dividends and income tax equivalents were lower than expected at the 2019-20 Budget by $523 million. This variance was mainly driven by the budget dividend from NSW Treasury Corporation of $231 million which was reduced to $75m, a dividend holiday being granted to Forestry Corporation due to bushfires and reduced dividends received from Landcom due to COVID-19 impacts on the property industry ($183 million).

Other Dividends and Distributions

Other dividends and distributions were $425 million higher than in the 2019-20 Budget, mainly driven by higher than expected investment income from:

• Higher Dividends and Distributions recognised by NSW Self Insurance Corporation ($226 million) due to improved financial market performance.

• Higher distributions from NSW Treasury Corporation Investment Management funds ($165 million).

Fines, Regulatory Fees and Other

Revenue from fines, regulatory fees and other revenues were $1.2 billion lower than the original budget. This was mainly driven by the following reasons:

• Mining royalties, which were $305 million lower than in the 2019-20 Budget, largely driven by significantly greater declines in thermal coal prices than were anticipated in the 2019-20 Budget.

• Reclassification of budgeted Fines and Regulatory Fees to Sale of Goods and Services ($245 million).

• Lower Fines of $214 million driven by the delay in the 'Toward Zero' program commencement.

• Reduced Right to Receive revenue for infrastructure concessions ($125 million).

• The residual variance was due to additional policy measures and other variances across General Government agencies.

Note 34


Expenses

Total expenses were higher than the original budget by $5.0 billion as outlined below.

Employee Expenses (excluding Superannuation)

Employee expenses was $1.3 billion higher than in the 2019-20 Budget. This was mainly driven by the following reasons:

• NSW Self Insurance Corporation, which was $479 million higher than in the 2019-20 Budget, primarilydue to workers compensation expense as a result of increases in outstanding claim liabilities.

• Ministry of Health, which was $145 million higher than expected at the 2019-20 Budget, primarily due toadditional resources required for the response of COVID-19.

• Department of Communities and Justice, which was $139 million higher than in the 2019-20 Budget dueto additional employee expenditure across corrective services, courts and tribunal services and youthjustice and child protection areas.

• Service NSW, which was $102 million higher than in the 2019-20 Budget, mainly driven by thereclassification from the operating cost, and COVID-19 impact.

• The residual variance was due to additional policy measures impacting employee related costs across anumber of agencies.

Superannuation Interest Cost and Other Superannuation Expenses

Superannuation Interest Cost and Other was $60 million lower than the original budget due to a decrease in interest rates.

Depreciation and Amortisation Expenses

Depreciation and amortisation were $162 million lower than in the 2019-20 Budget, mainly due to lower than expected completed assets, particularly related to road infrastructure projects.

Interest Expenses

Interest expenses were $194 million lower than in the 2019-20 Budget, mainly due to the decrease in interest rates as compared to the original budget estimates.

Other Operating Expenses

Other Operating Expenses was $2.3 billion higher than anticipated at the 2019-20 Budget. This was mainly driven by the following:

• NSW Self Insurance Corporation, which was $2.1 billion higher than in the 2019-20 Budget driven by $828 million for sensitive claims in the Treasury Managed Fund (TMF) and the Pre-Managed Fund (PMT) in the June 2020 valuation, $551 million impact in the other TMF general line liabilities not part of the $507 million of losses related to the bushfire disaster and $343 million additional insurance claim costs due to COVID-19 impact.

• Ministry of Health, which was $409 million higher than the 2019-20 Budget, mainly driven by the costs relating to the procurement of Personal Protective Equipment in response to the COVID-19 pandemic.

• Department of Education, which was $219 million higher than in the 2019-20 Budget, due to increased cleaning and maintenance expenses due to the COVID-19 pandemic.

• These increases were partially offset by lower costs of $1.1 billion incurred by Transport for NSW and Sydney Metro for major rail projects. This impact was largely offset by a corresponding decrease in Sale of Goods and Services.

• The remaining variance was due to additional policy measures across a number of agencies.

Note 34


Grants and Subsidies Expenses

Recurrent and capital grants, subsidies and other transfers expenses was $1.8 billion higher than the 2019-20 Budget. This was primarily due to:

• Transport for NSW, which was $1.3 billion higher than the 2019-20 Budget driven by Restart capital grants to Sydney Metro for City to Southwest line, and the grant expenses to other transport agencies to supplement the reduced revenue collected from passengers for use of the public transport system and cleaning expenses due to the COVID-19 pandemic.

• The Treasury, which was $530 million higher than in the 2019-20 Budget, due to the Small Business Grant program and quarantine package as part of the COVID-19 Stimulus Packages.

• Office of the NSW Rural Fire Service, which was $355 million higher than the budget primarily due to the expenses incurred for bushfire disaster.

These were offset by lower than expected results in:

• Department of Education, which was $350 million lower than expected at the Budget driven by the lower grant expenses for capital projects and programs that were delayed due to the COVID-19 pandemic.

Operating Result

The Operating Result is the budget result (net operating balance) plus the sum of other economic flows included in the operating result.

The Operating Result for 2019-20 was a deficit of $9.9 billion, $11.4 billion lower than the original budget estimate. This result captures the sum of the Budget Result variance of $7.9 billion and net variances in Other Economic Flows included in the Operating Result of $3.5 billion, mainly driven by unrealised losses in the Government’s managed funds due to the unfavourable market movement.

Comprehensive Result

The comprehensive result is the operating result plus the sum of other economic flows - other comprehensive income.

The Comprehensive Result for 2019-20 was a deficit of $10.4 billion, $15.3 billion lower than the budget estimate. This result was attributable to the Operating Result variance of $11.4 billion and the variance in Other Economic Flows – Other Comprehensive Income of $3.9 billion due mainly to actuarial adjustments to Superannuation and the net movements in equity investments in PFC/PNFC sector entities.

Net Lending

The net lending result is the budget result (net operating balance) adjusted for the net acquisition and sale of non-financial assets.

Net Lending was lower than the original budget by $7.6 billion, mainly due to a deteriorated operating position given the impact of and response to the COVID-19 pandemic and the Government's record infrastructure investment in 2019-20.

Note 34


The NSW General Government Sector Statement of Financial Position as at 30 June 2020


Budget Variance

$m $m $m

ASSETS Financial Assets Cash and Cash Equivalent Assets 1,050 6,134 5,084Receivables 7,069 11,281 4,212Tax Equivalents Receivable 29 15 (14)Investments, Loans and Placements Financial Assets at Fair Value 34,618 40,874 6,256 Other Financial Assets 1,827 1,533 (294)Advances Paid 1,265 1,239 (26)Deferred Tax Equivalents 2,294 2,127 (167)Equity Investments in Other Public Sector Entities 108,612 100,249 (8,363) Investments in Associates 12,689 11,866 (823) Other Equity Investments 0 7 7

Total Financial Assets 169,454 175,326 5,872

Non-Financial Assets Contract Assets 0 24 24Inventories 298 1,188 890Forestry Stock and Other Biological Assets 9 14 5Assets Classified as Held for Sale 276 286 10Property, Plant and Equipment Land and Buildings 96,897 94,822 (2,075) Plant and Equipment 11,692 12,538 846 Infrastructure Systems 129,273 124,406 (4,867)Right-of-Use Assets (0) 6,503 6,503Intangibles 3,446 3,686 240Other Non-Financial Assets 8,936 6,858 (2,078)

Total Non-Financial Assets 250,826 250,325 (501)

TOTAL ASSETS 420,280 425,651 5,371

LIABILITIES

Deposits Held 93 69 (24)Payables 7,273 7,031 (242)Contract Liabilities 0 1,156 1,156Tax Equivalents Payable 15 80 65Borrowings and Derivatives at Fair Value 147 392 245Borrowings at Amortised Cost 50,091 67,885 17,794Advances Received 783 696 (87)Employee Provisions 19,820 22,566 2,746Superannuation Provision 58,731 67,890 9,159Deferred Tax Equivalent Provision 122 82 (40)Other Provisions 10,556 14,101 3,545Other Liabilities 5,701 5,015 (686)

TOTAL LIABILITIES 153,334 186,964 33,630

NET ASSETS 266,946 238,688 (28,258)

Note 34


The NSW General Government Sector Statement of Financial Position as at



Budget Variance

$m $m $m

NET WORTH Accumulated Funds 87,986 67,479 (20,507)Reserves 178,960 171,209 (7,751)

TOTAL NET WORTH 266,946 238,688 (28,258)


Net Debt 12,354 19,261 6,907

Net Financial Liabilities 92,493 111,887 19,394

Analysis of the General Government Sector Statement of Financial Position

Net Debt

Net debt was $19.3 billion at 30 June 2020. This was $6.9 billion higher than in the 2019-20 Budget, primarily driven by $17.8 billion increase to borrowings, offset by $5.1 billion increase in cash to support funding and expenditure as a result of bushfires, drought and COVD-19.

Net Financial Liabilities

Net financial liabilities were $111.9 billion at 30 June 2020. This was a $19.4 billion increase over the budget estimate. This change was primarily driven by increased borrowings to fund infrastructure investment of the General Government Sector, unfunded Superannuation Liability due to changes in the discount rate applied and to support Sector stimulus packages and support sector cashflows due to COVID-19. This has been partially offset by the movement of the Equity Investments in Other Public Sector Entities.

Net Worth

Net worth was $238.7 billion at 30 June 2020. This was $28.3 billion lower than the original budget. The decrease in net worth was mainly driven by a deteriorated operating position given the impact of the COVID-19 pandemic, increased provisions mainly resulting from lower than budgeted discount rates used and increased borrowings with NSW TCorp to fund infrastructure investment of General Government Sector and to support COVID-19 related funding.

Note 34


The NSW General Government Sector Statement of Cash Flows for the Year Ended

30 June 2020


Budget Variance

$m $m $m


Taxation 31,954 28,346 (3,608)Sale of Goods and Services 10,249 8,878 (1,371)Grants and Subsidies 32,859 33,775 916Interest 235 291 56Dividends and Income Tax Equivalents from Other Sectors 1,714 1,139 (575)Other 10,283 12,559 2,276

Total Receipts 87,295 84,988 (2,307)

Payments

Employee Related (33,794) (34,083) (289)Superannuation (4,567) (4,649) (82)Payments for Goods and Services (20,661) (21,291) (630)Grants and Subsidies (14,997) (16,180) (1,183)Interest (1,868) (1,839) 29Other (4,714) (7,231) (2,517)

Total Payments (80,602) (85,272) (4,670)

NET CASH FLOWS FROM OPERATING ACTIVITIES 6,693 (284) (6,977)

CASH FLOWS FROM INVESTING ACTIVITIES

Non-financial Assets

Proceeds from Sale of Non-Financial Assets 1,120 223 (897)Purchases of Non-Financial Assets (20,525) (17,252) 3,273

Net Cash Flows from Investments in Non-Financial Assets (19,404) (17,029) 2,375

Financial Assets (Policy Purposes)

Receipts 158 2,768 2,610Payments (3,190) (4,739) (1,549)

Net Cash Flows from Investments in Financial Assets (Policy Purposes) (3,032) (1,971) 1,061


Proceeds from Sale of Investments 9,145 6,131 (3,014)Purchase of Investments (2,727) (4,313) (1,586)

Net Cash Flows from Investments in Financial Assets (Liquidity Purposes) 6,417 1,818 (4,599) NET CASH FLOWS FROM INVESTING ACTIVITIES (16,019) (17,181) (1,162)

Note 34


The NSW General Government Sector Statement of Cash Flows for the Year Ended



Budget Variance

$m $m $m

CASH FLOWS FROM FINANCING ACTIVITIES Advances Received 170 21 (149)Advances Repaid (203) (98) 105Proceeds from Borrowings 8,192 22,943 14,751Repayments of Borrowings (1,323) (1,253) 70Deposits Received (Net) 2 2 ...Other (Net) 85 15 (70)

NET CASH FLOWS FROM FINANCING ACTIVITIES 6,923 21,630 14,707

NET DECREASE IN CASH AND CASH EQUIVALENTS (2,403) 4,165 6,568

Opening Cash and Cash Equivalents 3,438 1,969 (1,469)Reclassification of Cash Equivalents 15 (0) (15)CLOSING CASH BALANCE 1,050 6,134 5,084


Net Cash Flows from Operating Activities 6,693 (284) (6,977)Net Cash Flows from Investments in Non-Financial Assets (19,404) (17,029) 2,375CASH SURPLUS/(DEFICIT) (12,711) (17,312) (4,601)

Analysis of the General Government Sector Statement of Cash Flows

Cash Result

The cash deficit was $17.3 billion at 30 June 2020, $4.6 billion higher than the estimated budget cash deficit of $12.7 billion at 2019-20 Budget. It was mainly driven by a weak operating position due to the COVID-19 impact and the Government maintaining its record infrastructure investment.

Note 35


Note 35: Disaggregated Financial Statements

Disaggregated Sector Information

Disaggregated primary financial statements are provided for the General Government Sector and PNFC and PFC sectors as a note to the TSSA. These financial statements are prepared consistent with the accounting policies adopted in the TSSA. This sector information is determined before consolidation eliminations, and includes GFS type fiscal aggregates and reconciliations.

The Total State Sector comprises a consolidation of three sectors:

• General Government (GGS);

• Public Non-Financial Corporations (PNFC), also referred to as the PTE sector; and

• Public Financial Corporations (PFC), also referred to as the PFE sector. The broad sectors have been determined in accordance with the GFS of the ABS.

The General Government Sector comprises all government agencies that are controlled and mainly financed by taxation that:

• undertake policy and regulatory functions;

• redistribute income and wealth;

• provide or distribute goods and services on a non-market basis to individuals and the community; and/or

• provide services to General Government agencies. PNFCs are government-controlled entities that are either commercial or non-commercial in nature and largely self-funded from user charges. However, they may also receive funding from the General Government Sector for social programs (non-commercial activities).

PFCs are government-controlled entities that perform central bank functions, or accept demand, time or savings deposits, or have the authority to incur liabilities and acquire financial assets in the market on their own account. This sector includes NSW Treasury Corporation. This note presents statements of:

• comprehensive income;

• financial position;

• cash flows; and

• changes in equity for each sector, including the Total State Sector.

For the purpose of this disclosure, transactions and balances between sectors have not been eliminated, but those between entities within each sector have been eliminated.

Pursuant to National Competition Policy, the State has implemented a National Tax Equivalents Regime (NTER) for Public Corporations and some General Government agencies.

Tax effect accounting principles have therefore been adopted by all agencies that are part of the NTER. On consolidation, all NTER related income tax entries are eliminated for the Total State Sector.

The comparative year columns in the following tables have been restated for any corrections of errors and changes in accounting policies, for consistency with the 2018-19 presentation.

In addition, this note also presents information on total expenses and total assets by function for the General Government and Total State Sectors. ‘Functions’ are broad policy areas, which the ABS refers to as Classifications of the Functions of Government (COFOG).

Note 35


The NSW Total State Sector Accounts Statement of Comprehensive Income by Sector for

the Year Ended 30 June 2020

General Government Public Non-financial Corporations

2019-20 2018-19

Restated(a) 2019-20 2018-19

Restated(a) FROM CONTINUING OPERATIONS $m $m $m $m

Revenue from Transactions Taxation 29,941 31,026 ... ...Grants and Subsidies Commonwealth General Purpose 18,073 17,907 ... ... Commonwealth Specific Purpose Payments 11,278 10,224 ... ... Commonwealth National Partnership Payments 3,886 2,737 ... ... Other Grants and Subsidies 1,068 981 3,156 3,022Sale of Goods and Services 8,713 9,745 7,836 8,357Interest 364 491 51 76Dividend and Income Tax Equivalents from Other Sectors 1,354 1,932 ... ...Other Dividends and Distributions 2,426 1,934 6 15Fines, Regulatory Fees and Other 4,262 4,679 620 621

Total Revenue from Transactions 81,367 81,655 11,669 12,092


Employee 35,555 33,158 2,859 2,754Superannuation Superannuation Interest Cost 882 1,412 45 55 Other Superannuation 3,288 3,052 215 187Depreciation and Amortisation 5,948 5,171 3,206 2,815Interest 2,084 1,812 1,040 1,042Income Tax Equivalents ... ... 210 309Other Property Expense ... ... ... ...Other Operating Expense 23,156 21,146 5,580 5,852Grants and Subsidies Recurrent Grants and Subsidies 16,369 13,595 60 68 Capital Grants 1,001 1,105 ... 12

Total Expenses from Transactions 88,283 80,450 13,215 13,094

TRANSACTIONS FROM DISCONTINUING OPERATIONS ... ... ... 40

NET RESULT FROM TRANSACTIONS -

NET OPERATING BALANCE (BUDGET RESULT

FOR THE GENERAL GOVERNMENT SECTOR) (6,916) 1,206 (1,546) (962)

(a) Refer Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period.

Note 35


Public Financial Corporations Eliminations Total State Sector 2019-20 2018-19

Restated(a) 2019-20 2018-19

Restated(a) 2019-20 2018-19

Restated(a) $m $m $m $m $m $m

532 516 (534) (502) 29,939 31,040

... ... ... ... 18,073 17,907 ... ... ... ... 11,278 10,224 ... ... ... ... 3,886 2,737 ... ... (3,234) (3,102) 990 900

871 754 (3,265) (3,630) 14,155 15,225 2,388 2,263 (2,193) (2,030) 610 801

... ... (1,354) (1,932) ... ... 2,478 1,715 (2,270) (1,639) 2,641 2,025

1 0 (154) (68) 4,729 5,234

6,269 5,249 (13,003) (12,903) 86,302 86,093

207 159 (510) (527) 38,112 35,544

0 ... ... ... 927 1,466 16 12 (1) ... 3,517 3,250 20 9 (14) (31) 9,159 7,964

2,222 2,299 (2,149) (2,016) 3,197 3,137 22 37 (232) (346) ... ... ... ... ... ... ... ...

3,832 3,097 (5,607) (5,289) 26,961 24,805

22 16 (3,152) (2,759) 13,299 10,921 ... ... (162) (376) 839 741

6,341 5,629 (11,828) (11,344) 96,011 87,828

... 122 ... (154) ... 8

(71) (258) (1,175) (1,713) (9,709) (1,727)


Note 35


The NSW Total State Sector Accounts Statement of Comprehensive Income by Sector for

the Year Ended 30 June 2020 (continued)


2019-20 2018-19

Restated(a) 2019-20 2018-19

Restated(a) $m $m $m $m

NET OPERATING BALANCE (6,916) 1,206 (1,546) (962)


Gain/(Loss) from Liabilities (201) (2,500) (7) (33)Other Net Gains/(Losses) (2,553) 13,700 (655) (3,146)Share of Earnings/(Losses) from Equity Investments (excl. Dividends) 46 (1) ... ...Dividends from Asset Sale Proceeds 31 (0) ... ...Deferred Income Tax from Other Sectors (123) (97) 120 (42)Other (212) 14 (6) (5)Discontinuing Operations - Other Economic Flows ... (0) ... ...

Other Economic Flows - included in Operating Result (3,013) 11,117 (547) (3,226)

OPERATING RESULT (9,929) 12,322 (2,094) (4,188)


Items that will not be reclassified to operating result

Revaluations 4,263 7,154 278 26Share of Associate's Other Comprehensive Income/(Loss) that will not be Reclassified Subsequently to Operating Result ... (10) ... ...Actuarial Gain/(Loss) from Superannuation (673) (13,364) (17) (756)Net Gain/(Loss) on Equity Instruments at Fair Value through Other Comprehensive Income (4,979) (7,950) ... (0)Deferred Tax Direct to Equity 15 151 (15) (151)Items that may be reclassified subsequently to operating result

Net Gain/(Loss) on Financial Instruments at Fair Value (8) 19 (6) (3)Share of Associate's Other Comprehensive Income/(Loss) that may be Reclassified Subsequently to Operating Result (243) (538) ... ...Other 1,171 165 (96) 6

Other Economic Flows - Other Comprehensive Income (454) (14,372) 142 (879)

COMPREHENSIVE RESULT - TOTAL CHANGE IN NET WORTH BEFORE TRANSACTIONS WITH OWNERS AS OWNERS(b) (10,382) (2,050) (1,951) (5,066)

Dividends Distributed ... ... (1,077) (1,475)Net Equity Injections/(Transfers) ... ... 6,654 (3,240)Total Change in Net Worth (10,382) (2,050) 3,626 (9,781)



Less: Net Other Economic Flows 3,466 3,256 405 4,105

NET OPERATING BALANCE (6,916) 1,206 (1,546) (962)


Purchases of Non-Financial Assets 18,070 16,464 4,205 5,202 Sales of Non-Financial Assets (639) (966) (264) (368) Less: Depreciation (5,948) (5,171) (3,206) (2,815) Plus: Change in inventories 839 38 108 (72) Plus: Other Movements in Non-Financial Assets - assets acquired using leases 2,915 159 75 ... - other (92) (38) 357 402 Equals Total Net Acquisition of Non-Financial Assets 15,145 10,485 1,275 2,349

EQUALS: NET LENDING/(BORROWING) (22,061) (9,280) (2,821) (3,311)

(a) Refer Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period. (b) Additional disclosure for the 2019-20 Total State Sector Accounts to disclose transactions with owners in their capacity as owners.

Note 35



Restated(a) 2019-20 2018-19

Restated(a) 2019-20 2018-19


(71) (258) (1,175) (1,713) (9,709) (1,727)

(418) (684) ... ... (626) (3,218)

(1,446) 10,867 51 (10,089) (4,603) 11,332

(2) (0) ... ... 45 (1) ... ... (31) 0 ... ... ... ... 3 139 ... ... ... ... ... ... (218) 10 ... ... ... 0 ... (0)

(1,866) 10,182 23 (9,950) (5,402) 8,123

(1,937) 9,924 (1,152) (11,664) (15,111) 6,395

(1) (0) ... 95 4,540 7,275

... ... ... ... ... (10) 0 (1) ... ... (690) (14,120)

... ... 4,979 7,332 (0) (618)

... ... ... 0 ... ...

... ... ... ... (14) 16

... ... ... ... (243) (538) (0) (0) 62 (621) 1,136 (450) (1) (1) 5,041 6,807 4,729 (8,446)

(1,938) 9,923 3,889 (4,857) (10,382) (2,050)

(76) (266) 1,153 1,740 ... ... ... (16,612) (6,654) 19,852 ... ...

(2,013) (6,955) (1,613) 16,735 (10,382) (2,050)

(1,938) 9,923 3,889 (4,857) (10,382) (2,050)

1,866 (10,181) (5,064) 3,144 673 323

(71) (258) (1,175) (1,713) (9,709) (1,727)

8 2 ... ... 22,283 21,668

(0) ... 0 17 (903) (1,317) (20) (9) 14 31 (9,159) (7,964)

... ... (21) ... 927 (34)

... ... 1 ... 2,990 159

... ... (6) (7) 259 357 (12) (7) (12) 40 16,396 12,868

(59) (251) (1,164) (1,753) (26,105) (14,595)

(a) Refer Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period. (b) Additional disclosure for the 2019-20 Total State Sector Accounts to disclose transactions with owners in their capacity as owners.

Note 35


The NSW Total State Sector Accounts Statement of Financial Position as at 30 June 2020


2019-20 2018-19

Restated(a) 2019-20 2018-19

Restated(a) $m $m $m $m

ASSETS Financial Assets Cash and Cash Equivalent Assets 6,134 1,969 2,110 2,548Receivables 11,281 7,491 1,295 1,211Investments, Loans and Placements Financial Assets at Fair Value 40,874 43,333 243 240 Other Financial Assets 1,533 2,591 421 656Advances paid 1,239 1,193 0 0Tax Equivalents Receivable 15 32 77 9Deferred Tax Equivalents 2,127 2,245 84 109Equity Investments Investments in Other Public Sector Entities 100,249 98,573 ... ... Investments in Associates 11,866 12,055 ... ... Other 7 8 181 189

Total Financial Assets 175,326 169,490 4,411 4,963

Non-Financial Assets Contract Assets 24 ... ... ...Inventories 1,188 399 576 474Forestry Stock and Other Biological Assets 14 10 827 1,171Assets Classified as Held for Sale 286 222 49 61Investment Properties ... ... 676 648Property, Plant and Equipment Land and Buildings 94,822 90,748 73,668 75,775 Plant and Equipment 12,538 12,162 4,106 5,968 Infrastructure Systems 124,406 118,190 55,792 48,645Right-of-Use Assets 6,503 ... 2,969 ...Intangibles 3,686 3,694 1,070 1,108Other 6,858 6,266 629 170

Total Non-financial Assets 250,325 231,690 140,363 134,020

TOTAL ASSETS 425,651 401,181 144,774 138,983

LIABILITIES Deposits Held 69 67 21 70Payables 7,031 7,079 2,005 2,136Contract Liabilities 1,156 ... 108 ...Borrowings and Derivatives at Fair Value 392 207 7 3Borrowings at Amortised Cost 67,885 37,656 26,707 24,558Advances Received 696 756 463 478Employee Provisions 22,566 20,802 1,227 1,150Superannuation Provision 67,890 67,696 3,057 3,010Tax Equivalents Payable 80 3 0 32Deferred Tax Equivalent Provision 82 108 2,129 2,246Other Provisions 14,101 11,604 1,664 1,410Other 5,015 6,134 192 322TOTAL LIABILITIES 186,964 152,110 37,580 35,415

NET WORTH 238,688 249,070 107,193 103,567


Net Debt 19,261 (10,401) 24,424 21,664 Net Financial Liabilities 111,887 81,194 33,170 30,453


Note 35



Restated(a) 2019-20 2018-19

Restated(a) 2019-20 2018-19


2,797 4,701 (324) (239) 10,717 8,979 1,211 1,154 (2,641) (2,330) 11,146 7,527

84,290 56,288 (79,497) (55,301) 45,909 44,560

11 7 (181) (461) 1,784 2,793 ... ... (463) (478) 776 715 ... ... (92) (41) ... ... ... ... (2,212) (2,354) ... ...

... ... (100,249) (98,573) 0 0 ... 2 ... ... 11,866 12,057

21,554 24,272 ... ... 21,741 24,468

109,862 86,424 (185,659) (159,778) 103,940 101,099

... ... ... ... 24 ...

... ... (21) ... 1,743 873

... ... ... ... 841 1,181

... ... ... ... 335 283

... ... ... ... 676 648

12 14 ... (190) 168,502 166,346 13 18 ... (74) 16,657 18,075 ... ... 0 (0) 180,197 166,835

63 ... (187) ... 9,349 ... 11 7 ... ... 4,768 4,809 83 36 (22) (22) 7,547 6,449

182 75 (230) (286) 390,640 365,499

110,044 86,499 (185,889) (160,064) 494,580 466,598

409 857 (354) (700) 144 293 346 337 (1,233) (1,195) 8,148 8,357

... ... (6) ... 1,259 ... 98,364 72,783 (405) (236) 98,358 72,757

80 6 (79,247) (55,069) 15,425 7,151 ... ... (463) (478) 696 756

43 35 (19) (18) 23,817 21,969 5 5 ... ... 70,951 70,711

12 7 (92) (41) ... ... ... ... (2,211) (2,354) ... ...

7,432 6,306 (1,410) (1,136) 21,786 18,185 10,102 10,898 (2) (4) 15,307 17,350

116,791 91,233 (85,443) (61,232) 255,892 217,528

(6,747) (4,734) (100,446) (98,833) 238,688 249,070

11,755 12,650 (4) (3) 55,437 23,909 6,929 4,809 (33) (27) 151,953 116,429


Note 35


The NSW Total State Sector Accounts Statement of Cash Flows by Sector for the Year

Ended 30 June 2020

General Government Public Non-financial Corporations(a)

2019-20 2018-19 2019-20 2018-19 $m $m $m $m


Taxation 28,346 30,603 ... ...Sale of Goods and Services 8,878 9,908 7,728 8,954Grants and Subsidies 33,775 31,810 3,151 3,017Interest 291 518 51 70Dividends and Income Tax Equivalents from Other Sectors 1,139 1,897 (0) ...Other 12,559 12,094 1,119 1,542

Total Receipts 84,988 86,830 12,049 13,583

Payments

Employee Related (34,083) (31,896) (2,420) (2,323)Superannuation (4,649) (4,325) (229) (205)Payments for Goods and Services (21,291) (20,874) (6,024) (6,199)Grants and Subsidies (16,180) (13,739) (60) (78)Interest (1,839) (1,455) (946) (922)Distributions Paid 0 (0) (301) (423)Other (7,231) (7,213) (1,067) (1,329)

Total Payments (85,272) (79,502) (11,046) (11,479)

NET CASH FLOWS FROM OPERATING ACTIVITIES (284) 7,328 1,003 2,104

CASH FLOWS FROM INVESTING ACTIVITIES Non-financial Assets Proceeds from Sale of Non-financial Assets 223 452 264 371Purchases of Non-Financial Assets (17,252) (18,087) (4,258) (5,325)

Net Cash Flows from Investments in Non-financial Assets (17,029) (17,635) (3,994) (4,955)

Financial Assets (Policy Purposes) Receipts 2,768 18,026 (26) 0Payments (4,739) (2,341) ... (810)

Net Cash Flows from Investments in Financial Assets (Policy Purposes) (1,971) 15,685 (26) (810)


Proceeds from Sale of Investments 6,131 10,029 192 228Purchase of Investments (4,313) (23,904) (5) (22)

Net Cash Flows from Investments in Financial Assets (Liquidity Purposes) 1,818 (13,875) 186 206

NET CASH FLOWS FROM INVESTING ACTIVITIES (17,181) (15,825) (3,834) (5,559)

CASH FLOWS FROM FINANCING ACTIVITIES Advances Received 21 56 1,964 2,025Advances Repaid (98) (125) (31) (31)Proceeds from Borrowings 22,943 5,561 1,841 2,067Repayments of Borrowings (1,253) (612) (643) (211)Dividends Paid ... ... (727) (1,611)Deposits Received (Net) 2 19 (49) (21)Other (Net) 15 151 9 21

NET CASH FLOWS FROM FINANCING ACTIVITIES 21,630 5,050 2,364 2,238

NET INCREASE/(DECREASE) IN CASH HELD 4,165 (3,448) (468) (1,216)

(a) The Statement of Cash Flows is presented to include both continuing and discontinued operations; amounts related to discontinued operations are disclosed in Note 5 Discontinued Operations.

Note 35


Public Financial Corporations(a) Eliminations Total State Sector(a) 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19

$m $m $m $m $m $m

527 522 (503) (490) 28,370 30,636 866 765 (3,305) (3,875) 14,167 15,752

... ... (3,216) (3,104) 33,710 31,723 2,368 2,118 (2,035) (1,844) 674 862

... 154 (1,139) (2,051) 0 (0) 2,668 1,680 (2,433) (1,735) 13,914 13,581

6,429 5,239 (12,630) (13,098) 90,835 92,554

(199) (175) 159 157 (36,542) (34,235) (16) (13) ... (1) (4,893) (4,542)

(3,445) (2,344) 5,981 5,668 (24,779) (23,747) (13) (8) 3,264 3,124 (12,988) (10,701)

(2,046) (2,358) 2,025 1,838 (2,806) (2,897) (18) (39) 318 463 ... ...

(1,012) 492 102 136 (9,207) (7,914)

(6,748) (4,445) 11,850 11,389 (91,216) (84,037)

(320) 794 (780) (1,710) (381) 8,517

0 ... (0) (16) 487 807

(8) (2) (39) 116 (21,557) (23,298)

(8) (2) (39) 100 (21,070) (22,492)

... ... (31) (31) 2,711 17,995 ... (553) 1,964 2,025 (2,775) (1,679)

... (553) 1,933 1,994 (63) 16,316

4,613 6,237 (6,636) (3,876) 4,298 12,618

(28,657) (11,417) 30,226 7,217 (2,749) (28,126)

(24,045) (5,179) 23,590 3,342 1,549 (15,508)

(24,053) (5,734) 25,484 5,436 (19,584) (21,684)

... ... (1,964) (2,025) 21 56

... ... 31 31 (98) (125) 103,028 62,561 (25,060) (6,098) 102,751 64,090 (80,442) (57,677) 1,387 2,615 (80,950) (55,885)

(118) (148) 844 1,759 ... ... ... ... ... (0) (47) (2) ... ... (28) (142) (4) 30

22,468 4,736 (24,790) (3,860) 21,672 8,164

(1,904) (204) (86) (133) 1,708 (5,003)


Note 35


The NSW Total State Sector Accounts Statement of Cash Flows by Sector for the Year

Ended 30 June 2020 (continued)

General Government Public Non-financial Corporations(a)

2019-20 2018-19 2019-20 2018-19 $m $m $m $m

Opening Cash and Cash Equivalents 1,969 5,418 2,548 3,808Reclassification of Cash Equivalents (0) (1) 29 (43)

CLOSING CASH BALANCE 6,134 1,969 2,110 2,548

DERIVATION OF CASH RESULT Net Cash Flows from Operating Activities (284) 7,328 1,003 2,104Net Cash Flows from Investments in Non-Financial Assets (17,029) (17,635) (3,994) (4,955)Dividend Distributions ... ... (727) (1,611)CASH SURPLUS/(DEFICIT) (17,312) (10,307) (3,718) (4,462)


Note 35


Public Financial Corporations(a) Eliminations Total State Sector(a) 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19

$m $m $m $m $m $m

4,701 4,905 (239) (161) 8,979 13,969 ... ... 1 56 30 12

2,797 4,701 (324) (239) 10,717 8,979

(320) 794 (780) (1,710) (381) 8,517

(8) (2) (39) 100 (21,070) (22,492) (118) (148) 844 1,759 ... ... (445) 644 25 149 (21,451) (13,975)


Note 35


The NSW Total State Sector Accounts Statement of Changes in Equity for the Whole of

Government by Sector for the Year Ended 30 June 2020

Equity at

1 July 2019



Restated(a)



ComprehensiveResult(b)

Transfers between equity

classes

Transactions with owners as owners

Equity at 30 June

2020 $m $m $m $m $m $m $m $m

General Government Sector Accumulated Funds 75,368 355 75,722 1,103 (10,518) 1,172 ... 67,478

Reserves Asset Revaluation Surplus 97,202 (1,039) 96,163 ... 4,263 (1,172) ... 99,254 Equity Investment Revaluation Surplus/Hedge Reserve in Associate (556) ... (556) ... (243) (0) ... (799)

Hedging Reserve 1 ... 1 ... (8) 0 ... (7)Financial Assets at Fair Value through Other Comprehensive Income 78,155 (417) 77,738 (66) (4,913) ... ... 72,759

Other 0 ... 0 ... ... (0) ... ... 250,172 (1,102) 249,070 1,037 (11,419) ... ... 238,688

Public Non-Financial Corporation Sector Accumulated Funds 42,652 ... 42,652 (42) (2,157) 975 5,577 47,006

Reserves ... Asset Revaluation Surplus 60,869 ... 60,869 (24) 278 (960) ... 60,163 Equity Investment Revaluation Surplus/Hedge Reserve in Associate ... ... ... ... ... ... ... ...

Hedging Reserve (3) ... (3) ... (6) ... ... (9)Financial Assets at Fair Value through Other Comprehensive Income (0) ... (0) ... ... ... ... (0)

Other 50 ... 50 ... ... (16) ... 35 103,567 ... 103,567 (66) (1,885) ... 5,577 107,193

Public Financial Corporation Sector Accumulated Funds (4,733) ... (4,733) ... (1,936) ... (76) (6,745)

Reserves ... Asset Revaluation Surplus 0 ... 0 ... (1) ... ... (0) Equity Investment Revaluation Surplus/Hedge Reserve in Associate ... ... ... ... ... ... ... ...

Hedging Reserve ... ... ... ... ... ... ... ...Financial Assets at Fair Value through Other Comprehensive Income (0) ... (0) ... ... ... ... (0)

Other ... ... ... ... ... ... ... ... (4,734) ... (4,734) ... (1,937) ... (76) (6,747)

Eliminations (98,833) ... (98,833) 66 3,822 ... (5,501) (100,446)

Total State Sector 250,172 (1,102) 249,070 1,037 (11,419) ... ... 238,688

(a) Refer Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period. (b) The Statement of Comprehensive Income includes AASB 15, AASB 16 and AASB 1058 transition adjustments in ‘Other Comprehensive

Income’.

Note 35


The NSW Total State Sector Accounts Statement of Changes in Equity for the Whole of

Government by Sector for the Year Ended 30 June 2019

Equity at

1 July 2019



Restated(a)



ComprehensiveResult(b)

Transfers between equity

classes

Transactions with owners as owners

Equity at 30 June

2020 $m $m $m $m $m $m $m $m

General Government Sector Accumulated Funds 76,243 367 76,610 14 (715) (187) ... 75,722

Reserves Asset Revaluation Surplus 90,248 (988) 89,260 ... 7,154 (250) ... 96,163 Equity Investment Revaluation Surplus/Hedge Reserve in Associate 25 ... 25 ... (548) (33) ... (556)

Hedging Reserve (17) ... (17) ... 19 (0) ... 1

Available for Sale Reserve 85,597 ... 85,597 (85,597) ... ... ... ...Financial Assets at Fair Value through Other Comprehensive Income ... (355) (355) 85,573 (7,950) 470 ... 77,738

Other ... ... ... ... ... 0 ... 0

252,095 (976) 251,119 (10) (2,040) ... ... 249,070

Public Non-Financial Corporation Sector Accumulated Funds 51,296 ... 51,296 8 (5,089) 1,151 (4,714) 42,652

Reserves ... Asset Revaluation Surplus 62,050 ... 62,050 ... 26 (1,207) ... 60,869 Equity Investment Revaluation Surplus/Hedge Reserve in Associate ... ... ... ... ... ... ... ...

Hedging Reserve (118) ... (118) ... (3) 118 ... (3)

Available for Sale Reserve 8 ... 8 (8) ... ... ...Financial Assets at Fair Value through Other Comprehensive Income ... ... ... ... (0) ... ... (0)

Other 112 ... 112 ... ... (62) ... 50 113,348 ... 113,348 ... (5,066) ... (4,714) 103,567

Public Financial Corporation Sector Accumulated Funds 2,220 ... 2,220 ... 9,925 ... (16,878) (4,733)

Reserves ... Asset Revaluation Surplus 1 ... 1 ... (0) ... ... 0 Equity Investment Revaluation Surplus/Hedge Reserve in Associate ... ... ... ... ... ... ... ...

Hedging Reserve ... ... ... ... ... ... ... ...Financial Assets at Fair Value through Other Comprehensive Income (0) ... (0) ... ... ... ... (0)

Other ... ... ... ... ... ... ... ... 2,219 ... 2,219 ... 9,924 ... (16,878) (4,734)

Eliminations (115,567) ... (115,567) ... (4,858) ... 21,592 (98,833)

Total State Sector 252,095 (976) 251,119 (10) (2,040) ... ... 249,070

(a) Refer Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period. (b) The Statement of Comprehensive Income includes AASB 9 transition adjustments in ‘Other Comprehensive Income’.

Note 35


Information on Expenses and Assets by Function

General Total

Government Sector State Sector 2019-20 2018-19 2019-20 2018-19 Restated(a)(b) Restated(a)(b)

$m $m $m $m

Total Expenses by Function (Policy Area) General Public Services(c)(d) 10,551 8,310 11,664 8,737Defence ... ... ... ...Public Order and Safety 8,643 8,232 8,642 8,246Economic Affairs(e) 5,261 3,097 7,304 4,996Environmental Protection 1,509 1,144 1,489 1,139Housing and Community Amenities 995 1,143 2,915 3,070Health 23,315 22,683 23,303 22,671Recreation, Culture and Religion 1,097 1,280 1,654 1,913Education(e) 17,024 17,050 16,912 16,941Social Protection 8,533 7,419 9,814 9,022Transport(d) 11,356 10,090 12,314 11,096

Total Expenses(f) 88,283 80,450 96,011 87,828

Total Assets by Function (Policy Area)(e) General Public Services 152,019 143,494 97,474 90,063Defence ... ... ... ...Public Order and Safety 13,407 10,053 13,398 10,051Economic Affairs 13,807 19,332 17,691 23,990Environmental Protection 1,039 763 1,120 846Housing and Community Amenities 15,121 3,197 27,707 15,401Health 28,145 23,510 28,145 23,510Recreation, Culture and Religion 13,112 17,655 19,607 23,890Education 38,835 37,402 38,835 37,402Social Protection 4,197 6,256 62,947 66,917Transport 145,967 139,519 187,655 174,526

Total Assets 425,651 401,181 494,580 466,598

(a) Refer Note 32 Restatement/Corrections to Prior Year Comparatives, for details of corrections to prior period. (b) For 2018-19, functions were not restated to reflect an impact of the revised outcome budgeting programs by agencies. (c) General Public Services for the General Government Sector includes the State’s equity investment in the PNFC/PFC sectors which is

eliminated in Total State Sector assets. (d) For 2018-19, $1,757 million was reclassified from General Public Services to Transport due to information becoming available after the

release of the 2018-19 Total State Sector Accounts. (e) For 2018-19, $655 million was reclassified from Education to Economic Affairs due to information becoming available after the release of

the 2018-19 Total State Sector Accounts. (f) The aggregate expenses and assets for the General Government Sector can be greater than the Total State Sector aggregates due to the

elimination of inter sector expenses and asset balances from the Total State aggregates.

The aggregate amount of the comprehensive result attributable to the General Government Sector from the PNFC and PFC sector entities in 2019-20 is $3,889 million net deficit (2018-19: $4,857 million net surplus). It comprises the sum of General Government Sector inter-sector expenses (grants, interest on borrowings, and purchases) less the sum of General Government Sector revenues (dividends, income and other tax revenues, revenues from sale of goods and services, interest from inter-sector loans, and gains on the equity investment in the PNFC/PFC sectors.

Note 36


Note 36: Key Fiscal Aggregates and Reconciliations to Government Finance Statistics

AASB 1049 harmonises Government Finance Statistics (GFS) with Generally Accepted Accounting Principles (GAAP) to the extent that GFS does not conflict with GAAP. This requires the selection of options within the Australian Accounting Standards that harmonise with the ABS GFS Manual.

The Australian Bureau of Statistics (ABS) Government Finance Statistics (GFS) Manual provides the basis upon which GFS information contained in this financial report is prepared. The principles and concepts contained in the GFS Manual share many similarities with accounting principles and concepts. Where harmonisation cannot be achieved as a result of differences in definition, recognition, measurement, classification and consolidation principles and rules, a convergence difference arises.

Key Fiscal Aggregates

Fiscal aggregates are useful for assessing the impact of the financial transactions of government-controlled entities on the economy. These measures are derived from the financial statements.

The net operating balance is calculated as income from transactions less expenses from transactions for both GFS and GAAP. It excludes gains and losses resulting from changes in price levels and other changes in the volume of assets. The GFS measure for the net operating balance will differ from the GAAP measurement due to differences in the treatment of revenue and expense items that are included in this fiscal aggregate under the two frameworks.

Net lending/(borrowing) is calculated as the net operating balance, less the net acquisition of non-financial assets. The GFS measure of net lending/(borrowing) will vary from the GAAP measure due to differences in the treatment of items that are recognised as revenues and expenses under GAAP. There will also be variances between the two frameworks arising from the recognition of items that are included in the presentation of the net acquisition of non-financial assets.

The total change in net worth reports the movement in the transactions and other economic flows that contribute to the closing balance of net worth reported in the Consolidated Statement of Financial Position (Balance Sheet). For both GFS and GAAP, the change in the net worth is calculated from the prior year’s net worth balance presented in NSW’s Report on State Finances. Items included in reconciling the change in net worth for a prior period, to the change in net worth for that same period, may include amendments to prior year balances that are permitted under accounting standards. Variances between GFS and GAAP in this fiscal aggregate, relate to the conceptual differences between these two frameworks for items reported in the Consolidated Statement of Comprehensive Income (Operating Statement).

Net worth represents total assets less total liabilities, excluding the State’s equity investments in the PNFC and PFC sectors under GFS. GAAP net worth differs from GFS as it includes the GGS equity investments in the PNFC and PFC sector. Under GAAP these equity investments in the PNFC and PFC sector are measured at the fair value of the Government's proportional share of the carrying amount of net assets. GFS differs from GAAP and reports the equity investment in the PNFC and PFC sectors as zero, as the shares and other contributed equity are considered to represent a liability to the State as the owner.

In this publication net debt is reported as the sum of deposits held, government securities, loans and other borrowing, less the sum of cash and deposits, advances paid and investments, loans and placements. GFS data published by the ABS presents debt in a matrix form with no single net debt aggregate identified.

The following convergence differences are recognised as at June 2020:

Under GAAP, loans are recognised initially at fair value and thereafter at amortised cost. Under GFS, interest free or low interest loans are recognised based on the amount lent, and interest is recognised based on any cash interest paid. Any difference between the original amount lent and the fair value is initially recognised to the operating result and subsequently amortised over the life of the loan. This results in the value of GFS advances/(borrowings) being higher/(lower) than GAAP advances/(borrowings).

Note 36


Under GAAP, dividends to owners by the PNFC and PFC sectors are treated as distribution to owners and therefore a direct reduction of accumulated funds. Under GSF, these are treated as a GFS expense. This difference does not impact the Total State Sector as dividends are eliminated on consolidation.

The State receives certain transfer payments from the Australian Government which are required to be on-passed to recipients as determined by the Australian Government. Most of these transfer payments relate to grants from the Australian Government for specific non-government schools or for local government authorities. As the State has no control over the transfer payments, they are not recognised as State revenues and expenses. However, the ABS has determined that for GFS purposes the transfer payments be recognised as GFS revenues and expenses of the States and Territories. The State publishes information on these excluded transfer payments as a footnote to the grants revenue and expense information included in the Uniform Presentation Framework: Outcomes Report to assist users understand the full value of the amounts on-passed. Refer to Note 2: Revenue and Table 7 of the Outcomes report.

Under GAAP, transport and energy subsidies paid from GGS to PNFCs for students and pensioners are eliminated for total state reporting. However, GFS treats the payment by the State as a gross expense, and a gross revenue for electricity sales and travel fares.

Under GAAP taxation is recognised in the sector in which it is collected. Under GFS, a tax or fine can only be incurred in the GGS. For GFS reporting, if this income is collected by a PFC/PNFC due to administrative requirements, it is reclassified as a tax receipt in the GGS and an equivalent subsidy is paid back to the PFC/PNFC sector.

Certain staff employed in the GGS provide services to PNFCs. Under GAAP, the employee expense and the revenue recoverable from the PNFC sector is reported in the GG sector. Under GFS, the revenue and expense are offset in the GGS and the employee expense related to these personnel is recognised in the PNFC sector where the services were provided.

Some statutory incomes are recognised for GAAP as licence fee revenue under AASB 15. Under GFS these items continue to be recognised as taxation revenue.

Dividends are treated as an equity distribution under GAAP. Dividends are reported as an expense for the PNFC and PFC sectors for GFS purposes.

Under GAAP, the component of income tax equivalents related to the disposal of discontinuing operations is reported other economic flows, similar to deferred taxes. Under GFS, this is treated as a return of capital, rather than a transaction.

Under GAAP an allowance for doubtful debts is recognised in the Consolidated Statement of Financial Position and doubtful debts are recognised in the Consolidated Statement of Comprehensive Income as other economic flows. GFS only recognises bad debts when they are written off as an expense and does not recognise a provision for doubtful debt.

GAAP recognises a prepaid income liability for unamortised short-term and low value prepaid licences in the Consolidated Statement of Financial Position. This liability is excluded from the GFS Consolidated Statement of Financial Position as the prepaid income is treated as an upfront sale of a non-produced intangible asset (e.g. a permit or licence to engage in an activity over an extended period of time).

GAAP recognises provisions, whereas GFS does not recognise provisions when the identity of the party to whom the obligation is owed is unknown. The balance for provisions and other liabilities is therefore lower under GFS.

Measurement differences occur between GAAP and GFS for the valuation of assets held for sale. AASB 5 Non-current Assets Held for Sale and Discontinued Operations requires valuation at fair value less costs to sell, whereas GFS valuation is at market value which does not include costs to sell.

GAAP adopts tax effect accounting whereby timing differences between accounting profit and tax profit are deferred as future income tax benefit assets or provisions for deferred tax liabilities. GFS does not recognise deferred tax. This is not relevant for the TSS as income tax equivalents are eliminated on consolidation. Revaluations of infrastructure within the PNFC sector represent one of the major drivers impacting the provisions for deferred tax liabilities and are a cause of the significant differences between the GFS and the AASB 1049 sector fiscal aggregates.

Note 36


The basis for the valuation of the PNFC/PFC sector is net assets in the absence of a market value for both GAAP and GFS purposes. The measurement of net assets differs for GFS in that, for example, allowance for impairment of receivables, onerous contract provisions and deferred income tax balances are not recognised in net worth under GFS.

Under GAAP, the PFNC/PFC sectors report net worth equal to total assets less total liabilities. GFS treats the GGS ownership interest (contributed equity) of these sectors as a liability and reports zero net worth for the PNFC/PFC sectors.

Deferred income and prepayments are reported as other assets and liabilities under GAAP as there is no present obligation to repay them. Under GFS they are reported as payables and receivables.

Rental bond assets and liabilities are considered trust monies and are excluded from the Consolidated Statement of Financial Position under GAAP. Under GFS rental bond monies are to be recognised in the Consolidated Statement of Financial Position.

Land may be treated as inventory under GAAP and measured at the lower of cost and net realisable value. Changes in inventory are presented on a net basis for GAAP. Under GFS, land is classified as a tangible non-financial non-produced asset and recognised at its market value and acquisitions of land are presented separately from disposals of land. These recognition and measurement differences impact both the Consolidated Statement of Comprehensive Income when land inventory is remeasured, and the value of the land inventory assets recorded in the Consolidated Statement of Financial Position. It is not possible to estimate the value that GFS would apply to land that is treated as inventory under GAAP.

Under AASB16 Leases, the distinction between an operating and a finance lease has been removed from the lessee perspective. Under GAAP, a right-of-use asset is recognised with associated lease liability, interest and depreciation expense. GFS continues to maintain a distinction between operating and finance leases which GAAP based financial systems are now no longer able to replicate. A convergence difference between GAAP and GFS arises in the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Financial Position, as it is no longer possible to distinguish the flows related to finance leases separately from operating leases under GAAP. Refer to Note 1 for further details of the application of AASB16.

Note 37


Note 37: Details of Consolidated Entities

The Total State Sector comprises the entities listed below.

Four controlled entities have a reporting date other than 30 June. The reporting date for the National Art School, Technical Education Trust Fund and the Border Fence Maintenance Board is 31 December. The reporting date for the Sydney Cricket and Sports Ground Trust is 28 February as it is aligned to the sporting year associated with its primary activities.

It is considered not material to the results and financial position of the TSSA to attempt to align the reporting period of these reporting entities to 30 June. Accordingly, the annual financial results of these reporting entities as at the last reported year (ending December or February) have been consolidated into the 30 June TSSA.

Entities and Staff Agencies displayed in italics have been abolished.

Changes to Reporting Entities

There have been a number of changes to reporting entities since the last TSSA that affect reporting in this financial year. These changes are as a result of legislative amendments and Administrative Changes Orders which are outlined below.

On 2 April 2019, the Administrative Arrangements (Administrative Changes−Public Service Agencies) Order 2019 was introduced to take effect from 1 July 2019 (except for certain clauses which are taken to have commenced on a retrospective date). Following the release, the Administrative Arrangements (Administrative Changes-Public Service Agencies) Order (No. 2) 2019 was introduced on 1 May 2019, repealing the Order of 2 April, to take effect from 1 July 2019.

As part of these revised arrangements these major changes have occurred:

• Department of Finance, Services and Innovation was abolished, with the Department of Customer Service established;

• Department of Family and Community Services and Department of Justice was abolished, with the Department of Communities and Justice established;

• Department of Industry and Department of Planning and Environment was abolished, with the Department of Planning, Industry and Environment established;

• Barangaroo Delivery Authority and Barangaroo Delivery Authority Staff Agency were abolished, and functions were transferred to Infrastructure NSW;

• Office of Environment and Heritage was abolished, and functions were transferred to the Department of Premier and Cabinet and the Department of Planning, Industry and Environment;

• Office of Local Government was abolished, and functions were transferred to the Department of Planning, Industry and Environment; and

• UrbanGrowth NSW Development Corporation and UrbanGrowth NSW Development Corporation Staff Agency were abolished, and functions transferred to Infrastructure NSW.

The Office of Ageing and Disability Commissioner was created as a NSW Government agency under the Ageing and Disability Commissioner Act 2019 No 7 effective 1 July 2019.

Road and Maritime Service was abolished, and functions transferred to Transport for NSW under the Transport Administration Amendment (RMS Dissolution) Act 2019 No 19 effective 1 December 2019.

Aboriginal Languages Trust Board was established as a NSW Government agency under the Aboriginal Languages Act 2017 effective 5 March 2020.

Regional NSW was established as a separate NSW Government agency under the Administrative Arrangements (Administrative Changes—Regional NSW and Independent Planning Commission) Order 2020 effective 2 April 2020.

Resilience NSW was established as a NSW Government agency under the Administrative Arrangements (Administrative Changes— Resilience NSW) Order 2020 effective 1 May 2020.

Various changes to consolidated entities under the Administrative Arrangements (Administrative Changes—Regional NSW and Independent Planning Commission) Order 2020 effective 1 July 2020 are disclosed in Note 31: Events After the Reporting Period.

Note 37


General Government Sector Agencies

Aboriginal Housing Office Dunghutti Aboriginal Elders Tribal Council Trust Aboriginal Languages Trust Board(a)

Alpha Distribution Ministerial Holding Corporation Art Gallery of New South Wales Trust

The Australian Institute of Asian Culture and Visual Arts Limited (VisAsia)

Art Gallery of New South Wales Trust Staff Agency Art Gallery of NSW Foundation(*) Australian Museum Trust

Australian Museum Trust Staff Agency Barangaroo Delivery Authority(b)

Barangaroo Delivery Authority Staff Agency(b) Belgenny Farm Agricultural Heritage Centre Trust(*) Biamanga National Park Board of Management(c)(*)

Biodiversity Conservation Trust of New South Wales Border Fence Maintenance Board(*) Building Insurers’ Guarantee Corporation C.B. Alexander Foundation(*) Cemeteries and Crematoria NSW(*) Centennial Park and Moore Park Trust Chief Investigator of the Office of Transport Safety

Investigations Combat Sports Authority of New South Wales(*) Corporation Sole ‘Minister Administering the Heritage Act,

1977’(*) Crown Entity, including the Consolidated Fund and Crown

Finance Entity Crown Solicitor’s Office Dams Safety Committee(*) Department of Communities and Justice(d)

John Williams Memorial Charitable Trust Department of Customer Service(d)

Safe Work NSW Department of Education

Advocate for Children and Young People Department of Family and Community Services(b) Department of Finance, Services and Innovation(b) Department of Industry(b) Department of Justice(b) Department of Planning and Environment(b) Department of Planning, Industry and Environment(d) Aboriginal Fishing Trust Fund

Agricultural Scientific Collections Trust Aquaculture Trust Fund Charter Fishing Trust Fund Coal Innovation Fund Commercial Fishing Trust Fund Crown Reserves Improvement Fund

Fish Conservation Trust Fund Game and Pest Management Trust Fund Independent Planning Commission Natural Resources Access Regulator Planning Ministerial Corporation Recreational Fishing (Fresh) Trust Fund Recreational Fishing (Salt) Trust Fund

Department of Premier and Cabinet Department of Transport

Transport for NSW Transport Service of New South Wales Roads and Maritime Services(e)

Destination NSW Destination NSW Staff Agency

Electricity Assets Ministerial Holding Corporation Electricity Retained Interest Corporation (ERIC-A)

Electricity Retained Interest Corporation (ERIC-E) Electricity Transmission Ministerial Holding Corporation Environment Protection Authority

Environment Protection Authority Staff Agency

Environmental Trust Epsilon Distribution Ministerial Holding Corporation Financial Counselling Trust Fund(f)(*) Fire and Rescue NSW Gaagal Wanggaan (South Beach) National Park Board of

Management(c)(*) Generator Property Management Pty Ltd(*) Greater Sydney Commission Greyhound Welfare and Integrity Commission(*) Gulaga National Park Board of Management(c)(*) Health Care Complaints Commission

Health Care Complaints Commission Staff Agency

Historic Houses Trust of New South Wales Foundation for the Historic Houses Trust of

New South Wales Hamilton Rouse Hill Trust Rouse Hill Hamilton Collection Pty Limited

Home Purchase Assistance Fund Hunter and Central Coast Development Corporation Independent Commission Against Corruption Independent Liquor and Gaming Authority Independent Pricing and Regulatory Tribunal

Independent Pricing and Regulatory Tribunal Staff Agency

Information and Privacy Commission Infrastructure NSW

Infrastructure NSW Staff Agency Jobs for NSW Fund(*) Judicial Commission of New South Wales Lands Administration Ministerial Corporation(g) Legal Aid Commission of New South Wales

Legal Aid Commission Staff Agency Liability Management Ministerial Corporation Library Council of New South Wales

Library Council of New South Wales Staff Agency State Library of New South Wales Foundation

Local Land Services Local Land Services Staff Agency

Long Service Corporation Lord Howe Island Board(*) Luna Park Reserve Trust Mental Health Commission of New South Wales

Mental Health Commission Staff Agency Ministerial Holding Corporation(*) Ministry of Health(h)

Agency for Clinical Innovation Albury Base Hospital Albury Wodonga Health Employment Division Bureau of Health Information Cancer Institute (NSW) Central Coast Local Health District Clinical Excellence Commission Far West Local Health District Graythwaite Trust Health Administration Corporation Health Education and Training Institute Hunter New England Local Health District Illawarra Shoalhaven Local Health District Justice Health and Forensic Mental Health Network Mid North Coast Local Health District Murrumbidgee Local Health District

Note 37


Nepean Blue Mountains Local Health District Northern NSW Local Health District Northern Sydney Local Health District South Eastern Sydney Local Health District South Western Sydney Local Health District Southern NSW Local Health District Sydney Local Health District The Sydney Children’s Hospitals Network (Randwick and

Westmead) (incorporating The Royal Alexandra Hospital for Children)

Western NSW Local Health District Western Sydney Local Health District

Mt Grenfell Historic Site Board of Management(c)(*) Multicultural NSW Multicultural NSW Staff Agency Mutawintji Board of Management(c)(*) National Art School(*) Natural Resources Commission

Natural Resources Commission Staff Agency New South Wales Crime Commission

New South Wales Crime Commission Staff Agency New South Wales Electoral Commission

New South Wales Electoral Commission Staff Agency New South Wales Government Telecommunications Authority New South Wales Institute of Sport(*) Institute of Sport Staff Agency New South Wales Rural Assistance Authority NSW Ovine Johne's Disease Transaction Based

Contribution Scheme NSW Crown Holiday Parks Trust(*) NSW Education Standards Authority

NSW Education Standards Authority Staff Agency

NSW Food Authority NSW Health Foundation(*) NSW Police Force NSW Self Insurance Corporation NSW Skills Board(*) New South Wales Technical and Further Education Commission TAFE Commission (Senior Executives) Staff Agency NSW Trustee and Guardian Office of Aging and Disability Commissioner(i) (*) Office of Environment and Heritage(b) Office of the Law Enforcement Conduct Commission

Office of Local Government(b) Office of the Children’s Guardian Office of the Director of Public Prosecutions

Office of the NSW Rural Fire Service Office of the NSW State Emergency Services Office of the Inspector of the Law Enforcement Conduct

Commission

Office of Sport Ombudsman’s Office Parliamentary Counsel’s Office Parramatta Park Trust(*) Ports Assets Ministerial Holding Corporation

Port of Newcastle Lessor Pty Limited Port Botany Lessor Pty Limited Port Kembla Lessor Pty Limited

Property NSW Public Service Commission Regional Growth NSW Development Corporation Regional NSW(j) Rental Bond Board Resilience NSW(k)

Responsible Gambling Fund(*) Roads Retained Interest Pty Ltd Royal Botanic Gardens and Domain Trust Service NSW Sporting Injuries Compensation Authority(*) State Insurance Regulatory Authority State Rail Authority Residual Holding Corporation(*) State Archives and Records Authority of New South Wales State Rescue Board of New South Wales(*)

Statutory Land Managers (numerous Trust Boards managing Crown Land Reserves)(*)

Sydney Metro The Audit Office of New South Wales Sydney Olympic Park Authority Technical Education Trust Fund(*) The Legislature The Treasury Trustees of the Anzac Memorial Building(*) Trustees of the Museum of Applied Arts and Sciences

Trustees of the Museum of Applied Arts and Sciences Staff Agency

UrbanGrowth NSW Development Corporation(b) UrbanGrowth NSW Development Corporation Staff Agency(b)

Australian Technology Park Sydney Limited(l) Water Administration Ministerial Corporation Water Investment Trust Fund Western City and Aerotropolis Authority

Western City and Aerotropolis Authority Staff Agency Western Sydney Parklands Trust Worimi Board of Management(c)(*) Workers’ Compensation (Dust Diseases) Authority Workers Compensation Commission of New South Wales

Note 37


Public Non-Financial Corporations

Catholic Metropolitan Cemeteries Land Manager Cobar Water Board(*) Essential Energy

NorthPower Energy Services Pty Limited

Forestry Corporation of New South Wales Hunter Water Corporation Hunter Water Australia Jenolan Caves Reserves Trust Landcom Newcastle Port Corporation

New South Wales Land and Housing Corporation Rental Housing Assistance Fund

Northern Metropolitan Cemeteries Land Manager NSW Trains Place Management NSW Rail Corporation New South Wales Rookwood General Cemeteries Reserve Land Manager

Rookwood Necropolis Land Manager(*)

Southern Metropolitan Cemeteries Land Manager(*) State Sporting Venues Authority State Transit Authority of New South Wales Sydney Cricket and Sports Ground Trust

Sydney Cricket and Sports Ground Trust Staff Agency Sydney Ferries Sydney Opera House Trust

Sydney Opera House Trust Staff Agency Sydney Trains Sydney Water Corporation Teacher Housing Authority of New South Wales Venues NSW

Newcastle International Sports Centre Club Waste Assets Management Corporation Water NSW

WaterNSW Infrastructure Pty Ltd Wentworth Park Sporting Complex Trust Zoological Parks Board of New South Wales

Public Financial Corporations

First Australian Mortgage Acceptance Corporation (FANMAC) Trusts ICNSW Australian Equities Fund ICNSW International Equities Fund (Unhedged) ICNSW International Equities Fund (Hedged) Insurance and Care NSW Insurers' Guarantee Fund Investment Trust Lifetime Care and Support Authority of New South Wales Motor Accident Injuries Treatment and Care Benefits Fund Long Service Corporation Investment Fund NSW Generations (Debt Retirement) Fund NSW Infrastructure Future Fund NSW Treasury Corporation NSW Trustee and Guardian Growth Portfolio SAS Trustee Corporation

SAS Trustee Corporation Staff Agency

Social and Affordable Housing NSW Fund Investment Trust

Superannuation Administration Corporation TCorpIM Absolute Return Multi-Asset Class Fund TCorpIM Alternative Risk Premia Fund TCorpIM Australian Bond Fund TCorpIM Australian Inflation Linked Bond Fund TCorpIM Australian Share Fund TCorpIM Bank Loan Fund TCorpIM Cash Fund TCorpIM Cyclical Growth Australian Share Fund TCorpIM Cyclical Growth International Share Fund

TCorpIM Direct Infrastructure Fund A TCorpIM Direct Investment Fund B TCorpIM Direct Investment Fund C TCorpIM Direct Investment Fund D TCorpIM Direct Investment Fund E TCorpIM Direct Investment Fund F TCorpIM Direct Investment Fund G TCorpIM Direct Investment Fund K TCorpIM Downside Protection Australian Share Fund TCorpIM Downside Protection International Share Fund TCorpIM Emerging Market Debt Fund TCorpIM Emerging Market Share Fund TCorpIM Global Credit Fund TCorpIM High Yield Fund TCorpIM Indexed Australian Share Fund TCorpIM Indexed International Share (Unhedged) Fund TCorpIM International Share (Hedged) Fund TCorpIM International Share (Unhedged) Fund TCorpIM Liquidity Cash Fund TCorpIM Listed Property Fund TCorpIM Long Term Growth Fund TCorpIM Medium Term Growth Fund TCorpIM Multi-Asset Class Fund TCorpIM Opportunistic Fund A TCorpIM Short Term Income Fund TCorpIM Small Cap Australian Share Fund TCorpIM Specialist Emerging Market Share Fund TCorpIM Unlisted Infrastructure Fund TCorpIM Unlisted Property Fund Treasury Managed Fund Investment Portfolio

(a) Agency was established on 5 March 2020 under the Aboriginal Languages Act 2017. (b) Agency was abolished 1 July 2019 under the Administrative Arrangements (Administrative Changes—Public Service Agencies) Order 2019. (c) National Park Boards of Management as per the National Parks and Wildlife Act 1974. (d) Agency was established on 1 July 2019 under the Administrative Arrangements (Administrative Changes—Public Service Agencies)

Order 2019. (e) Agency was abolished 1 December 2019 under the Transport Administration Amendment (RMS Dissolution) Act 2019 No 19. (f) The Trust was terminated effective 30 June 2019 in accordance with the clause 15(a) of the Trust Deed. (g) Including Crown Land reserves under the agency’s management. (h) The special purpose service entities of the local health districts have not been listed. (i) Agency was established on 1 July 2019 under the Ageing and Disability Commissioner Act 2019 No 7. (j) Agency was established 2 April 2020 under the Administrative Arrangements (Administrative Changes—Regional NSW and Independent

Planning Commission) Order 2020. (k) Agency was established 1 May 2020 under the Administrative Arrangements (Administrative Changes— Resilience NSW) Order 2020. (l) Agency was dissolved and voluntary deregistered on 3 October 2019 under the Corporations Act 2001 (Commonwealth). (*) These agencies are not considered material for whole-of-government reporting, so are excluded from individual agency budget reporting in Budget Paper 3. These agencies are however controlled and included in the consolidated financial statements of the State.

Note 38


Note 38: Key Technical Terms used in the Financial Statements

ABS GFS Manual: The Australian Bureau of Statistics (ABS) publication Australian System of Government Finance Statistics: Concepts, Sources and Methods as updated from time to time.

advances: loans acquired or made for policy purposes rather than liquidity management purposes.

capital expenditure: this is expenditure relating to the acquisition or enhancement of property, plant and equipment (including land and buildings, plant and equipment and infrastructure systems) and intangibles (including computer software and easements).

cash surplus/(deficit): net cash flows from operating activities plus net cash flows from acquisition and disposal of non-financial assets (less distributions paid for the public non-financial corporation (PNFC) and public financial corporation (PFC) sectors).

comprehensive result (total change in net worth before transactions with owners as owners): net result of all items of income and expense recognised for the period. It is the aggregate of the operating result and other movements in equity, other than transactions with owners as owners.

contract asset: an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity’s future performance).

contract liability: an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.

convergence difference: the difference between the amounts recognised in the financial statements compared with the amounts determined for GFS purposes as a result of differences in definition, recognition, measurement, classification and consolidation principles and rules.

defined contribution superannuation plans: are post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

defined benefit superannuation plans: are post-employment benefit plans other than defined contribution plans.

fair value: the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

fair value hierarchy: categorises into three levels the inputs to valuation techniques used to measure fair value.

• level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

• level 2 inputs: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• level 3 inputs: unobservable inputs for the asset or liability.

fair value through other comprehensive income: financial assets are classified and measured at fair value through other comprehensive income if they are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

fair value through profit or loss: financial assets are classified and measured at fair value through profit unless it is measured at amortised cost or at fair value through other comprehensive income.

financial asset is any asset that is:

(a) cash

(b) an equity instrument of another entity

(c) a contractual right:

(i) to receive cash or another financial asset from another entity, or

(ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity, or

Note 38


(d) a contract that will or may be settled in the entity’s own equity instruments and is:

(i) a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments, or

(ii) a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments. For this purpose the entity’s own equity instruments do not include instruments that are themselves contracts for the future receipt or delivery of the entity’s own equity instruments.

General Government Sector (GGS): this is an ABS classification of agencies that provide public services (such as health, education and police) or carry out policy or perform regulatory functions. General government agencies are funded in the main by taxation (directly or indirectly).

Government Finance Statistics (GFS): a system of financial reporting developed by the International Monetary Fund and used by the Australian Bureau of Statistics to classify the financial transactions of governments and measure their impact on the rest of the economy.

interest expense: costs incurred in connection with the borrowing of funds. It includes interest on advances, loans, overdrafts, bonds and bills, deposits, interest components of lease repayments, and amortisation of discounts or premiums in relation to borrowings. Where discounting is used, the carrying amount of a liability increases in each period to reflect the passage of time. This increase is also recognised as an interest expense.

key fiscal aggregates: balances useful for macro-economic analysis purposes, including assessing the impact of a government and its sectors on the economy. AASB 1049 Whole of Government and General Government Sector Financial Reporting prescribes: net worth, net operating balance, net lending/(borrowing), total change in net worth, and cash surplus/(deficit).

National Partnership Payments (NPP): an Australian Government grant to States and Territories to support the delivery of specified outputs or projects, to facilitate reforms or to reward the delivery of nationally significant reforms. Each NPP is supported by a National Partnership Agreement which defines mutually agreed objectives, outputs and performance benchmarks.

National Specific Purpose Payments (SPP): an Australian Government grant made to the States and Territories under the associated National Agreement. These grants must be spent in the key service delivery sector (Health, Education, Skills and Workforce, Disability and Indigenous) for which it is provided. States are free to allocate the funds within that sector to achieve the mutually agreed objectives specified in the associated National Agreement.

net acquisition of non-financial assets: This is purchases (or acquisitions) of non-financial assets less sales (or disposals) of non-financial assets less depreciation plus changes in inventories and other movements in non-financial assets. Purchases and sales (or net acquisitions) of non-financial assets generally include accrued expenses and payables for capital items. Other movement in non-financial assets include non-cash capital grant revenue/expenses such as developer contribution assets.

net cash flows from investments in financial assets (liquidity management purposes): cash receipts from liquidation or repayment of investments in financial assets for liquidity management purposes less cash payments for such investments. Investment for liquidity management purposes means making funds available to others with no policy intent and with the aim of earning a commercial rate of return.

net cash flows from investments in financial assets (policy purposes): cash receipts from the repayment and liquidation of investments in financial assets for policy purposes less cash payments for acquiring financial assets for policy purposes. Acquisition of financial assets for policy purposes is distinguished from investments in financial assets (liquidity management purposes) by the underlying government motivation for acquiring the assets. Acquisition of financial assets for policy purposes is motivated by government policies such as encouraging the development of certain industries or assisting citizens affected by natural disaster.

net debt: equals the sum of financial liabilities (deposits held, borrowings and derivatives and advances received) less the sum of the following financial assets (cash and deposits, advances paid and investments, loans and placements).

net defined benefit superannuation liability (asset): the deficit or surplus, adjusted for any effect of limiting a net defined benefit asset to the asset ceiling.

Note 38


net financial liabilities: calculated as total liabilities, less financial assets, other than equity in PNFCs and PFCs. This measure is broader than net debt as it includes significant liabilities, other than borrowings (for example, accrued employee liabilities such as superannuation and long service leave entitlements).

net interest on the net defined benefit liability/asset: this is the change during the period to the net defined superannuation liability/asset that arises from the passage of time.

net gain on equity investments in other sectors: comprises the net gains relating to the equity held by the GGS in other sector entities. It arises from a change in the carrying amount of net assets of the subsidiaries. The net gains are measured (in the absence of market values) based on the carrying amount of net assets/(liabilities) before elimination of intersector balances.

net lending/(borrowing): the financing requirement of government, calculated as the net operating balance less the net acquisition of non-financial assets. A positive result reflects a net lending position and a negative result reflects a net borrowing position.

net operating balance (net result from transactions): calculated as revenue from transactions minus expenses from transactions. It excludes gains and losses resulting from changes in price levels and other changes in the volume of assets.

net worth: an economic measure of wealth and is equal to total assets less total liabilities.

operating result: a measure of financial performance of the operations for the period. It is the net result of items of revenue, gains and expenses (including losses) recognised for the period, excluding those that are classified as ‘other comprehensive income’.

other economic flows: changes in the volume or value of an asset or liability that do not result from transactions (that is, revaluations and other changes in the volume of assets).

other superannuation expense: it includes all superannuation expenses from transactions except superannuation interest cost. Superannuation actuarial gains/losses are excluded as they are disclosed under ‘other economic flows’.

performance obligation: a promise in a revenue contract with a customer to transfer to the customer either:

(a) a good or service (or a bundle of goods or services) that is distinct; or

(b) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

Public Financial Corporations (PFC) sector: an ABS classification of government-controlled agencies that have one or more of the following functions:

• that of a central bank

• the acceptance of demand, time or savings deposits, or

• the authority to incur liabilities (such as insurance) and acquire financial assets in the market on their own account.

Public Non-Financial Corporations (PNFC) sector: an ABS classification, for GFS purposes, of agencies where user charges represent a significant proportion of revenue and the agencies operate within a broadly commercial orientation.

superannuation interest cost: this expense is the net interest on the net defined benefit liability/asset which shall be determined by multiplying the net defined liability/asset by the discount rate (government bond rate).

TCorpIM Funds: are managed investment schemes available to NSW public sector entities, NSW universities and some foundations and charities. They are structured as units trusts and are managed by the New South Wales Treasury Corporation (TCorp).

Total State Sector (TSS): represents all agencies and corporations owned and controlled by the NSW Government. It comprises the general government, public non-financial corporations and public financial corporations.

transactions: interactions between two institutional units by mutual agreement or actions within a unit that it is analytically useful to treat as transactions, such as depreciation expense. Unlike revaluations, transactions generally reflect economic events that impact the economy.

End of Audited Financial Statements

Outcomes Report 5 - 1

Uniform Presentation Framework: Outcomes Report

2019 - 2020

5 - 2 Outcomes Report

UNIFORM PRESENTATION FRAMEWORK: OUTCOMES REPORT

Purpose

The Outcomes Report presents financial aggregates according to the Uniform Presentation Framework (UPF) agreed by the Council on Federal Financial Relations (CFFR) in February 2019.

The UPF is an agreed framework between the Australian, State and Territory governments for the presentation of government financial information on a basis broadly consistent with the Australian Accounting Standard AASB 1049 Whole of Government and General Government Sector Financial Reporting. This framework sets out the minimum information to be reported by governments.

The UPF financial aggregates serve a number of purposes including:

allowing comparisons between the financial position of Australian governments on a consistent basis

facilitating time series comparisons since they are relatively unaffected by changes in public sectoradministrative structures, and

permitting an assessment of the impact of NSW public sector transactions on the economy by providingdata classified by economic type.

Relationship with other reporting

Information in the Outcomes Report is not audited, however it has been prepared consistent with the audited Total State Sector Accounts.

Several tables in the Outcomes Report are similar with those reported in the Total State Sector Accounts and are repeated here for completeness.

The Outcomes Report compares the published NSW Budget for 2019-20 with the outcome for the year.

Financial aggregates are published for the following:

general government (GGS) sector

public non-financial corporation (PNFC) sector

non-financial public (NFPS) sector

public financial corporation (PFC) sector.

Budget estimates are not prepared for the NSW Public Financial Corporations Sector. In addition to the reporting requirements, a consolidated NSW Total State Sector Statement of Financial Position by sector (Table 1) has been included. This assists in analysis of the Statement of Financial Position for the Total State Sector.

Changes to reporting requirements

Revised Uniform Presentation Framework (UPF)

Revisions to the UPF in 2019 largely reflect the 2015 update to the Australian System of Government Financial Statistics (GFS) framework. The update of the Australian GFS aims to better align with the International Monetary Fund’s GFS 2014 framework and the System of National Accounts 2008.



Table 1: NSW Public Sector Statement of Financial Position at 30 June 2020(a)

General Government

Sector

Public Non-financialCorporations

Non-financial Public Sector

Public Financial

Corporations

Total State Sector

$m $m $m $m $m

Assets

Financial Assets

Cash and Cash Equivalent Assets 6,134 2,110 8,244 2,797 10,717Receivables 11,281 1,295 10,578 1,211 11,146Investments, Loans and Placements

Financial Assets at Fair Value 40,874 243 41,117 84,290 45,909Other Financial Assets 1,533 421 1,879 11 1,784

Advances Paid 1,239 0 776 ... 776Tax Equivalents Receivable 15 77 12 ... (0)Deferred Tax Equivalent Assets 2,127 84 0 ... 0Equity Investments

Investments in Other Public Sector Entities 100,249 ... (6,747) ... 0Investments in Associates 11,866 ... 11,866 ... 11,866Other 7 181 187 21,554 21,741

Total Financial Assets 175,326 4,411 67,912 109,862 103,940


Contract Assets 24 ... 24 ... 24Inventories 1,188 576 1,743 ... 1,743Forestry Stock and Other Biological Assets 14 827 841 ... 841Assets Classified as Held for Sale 286 49 335 ... 335Investment Properties ... 676 676 ... 676Property, Plant and Equipment

Land and Buildings 94,822 73,668 168,490 12 168,502Plant and Equipment 12,538 4,106 16,644 13 16,657Infrastructure Systems 124,406 55,792 180,197 ... 180,197

Right of Use Assets 6,503 2,969 9,282 63 9,349Intangibles 3,686 1,070 4,757 11 4,768Other 6,858 629 7,468 83 7,547Total Non-Financial Assets 250,325 140,363 390,458 182 390,640

Total Assets 425,651 144,774 458,370 110,044 494,580

Liabilities

Deposits Held 69 21 90 409 144Payables 7,031 2,005 8,374 346 8,148Contract Liabilities 1,156 108 1,259 ... 1,259Borrowings and Derivatives at Fair Value 392 7 399 98,364 98,358Borrowings at Amortised Cost 67,885 26,707 94,509 80 15,425Advances Received 696 463 696 ... 696Employee Provisions 22,566 1,227 23,774 43 23,817Superannuation Provision(b) 67,890 3,057 70,947 5 70,951Tax Equivalents Payable 80 0 ... 12 ...Deferred Tax Equivalent Provision 82 2,129 (0) ... (0)Other Provisions 14,101 1,664 14,430 7,432 21,786Other 5,015 192 5,205 10,102 15,307

Total Liabilities 186,964 37,580 219,682 116,791 255,892

NET ASSETS 238,688 107,193 238,688 (6,747) 238,688



Table 1: NSW Public Sector Statement of Financial Position at 30 June 2020 (cont)

General Government

Sector

Public Non-financialCorporations

Non-financial Public Sector

Public Financial

Corporations

Total State Sector

$m $m $m $m $m

NET WORTH

Accumulated Funds 67,479 47,004 110,728 (6,747) 80,048Reserves 171,209 60,190 127,959 ... 158,639TOTAL NET WORTH 238,688 107,193 238,688 (6,747) 238,688

OTHER FISCAL AGGREGATESNet Debt(c) 19,261 24,424 43,677 11,755 55,437

Net Financial Liabilities(d) 111,887 33,170 145,023 6,929 151,953

Net Financial Worth(e) (11,638) (33,170) (151,770) (6,929) (151,953)

(a) This table has been presented on a liquidity basis as per AASB 1049. Amounts may not add across due to inter sector eliminations.(b) The Superannuation Provision is reported net of the fair value of fund assets.(c) Net debt equals the sum of deposits held, advances received and borrowings, minus the sum of cash and cash equivalents, advances paid

and investments, loans and placements.(d) Net financial liabilities equals total liabilities less financial assets excluding equity investments in other public sector entities.(e) Net financial worth equals total financial assets minus total liabilities.



Table 2: NSW General Government Sector Statement of Comprehensive Income

2019-20 2019-20Budget Actual

$m $m


Taxation (a) 31,841 29,941 Grants and Subsidies

- Commonwealth General Purpose 18,685 18,073 - Commonwealth Specific Purpose Payments 10,431 11,278 - Commonwealth National Partnership Payments 2,888 3,886 - Other Commonwealth Payments(b) 372 455 - Other Grants and Subsidies(b) 627 613

Sale of Goods and Services (a) 9,762 8,713 Interest 333 364 Dividend and Income Tax Equivalents from Other Sectors 1,877 1,354 Other Dividends and Distributions 2,001 2,426 Fines, Regulatory Fees and Other (a) 5,498 4,262 Total Revenue from Transactions 84,316 81,367


Employee 34,266 35,555 Superannuation

- Superannuation Interest Cost 1,079 882 - Other Superannuation 3,151 3,288

Depreciation and Amortisation 6,110 5,948 Interest 2,278 2,084 Other Operating Expense 20,815 23,156 Grants, Subsidies and Other Transfers 15,602 17,369 Total Expenses from Transactions 83,300 88,283

Transactions from Discontinuing Operations ... ...

BUDGET RESULT - SURPLUS/(DEFICIT) [Net Operating Balance] 1,016 (6,916)



Table 2: NSW General Government Sector Statement of Comprehensive Income (cont)


$m $m

Other Economic Flows - Included in the Operating Result

Gain/(Loss) from Liabilities 11 (201) Other Net Gains/(Losses) 434 (2,553) Share of Earnings/(Losses) from Equity Investments (excl. Dividends) ... 46 Dividends from Asset Sale Proceeds (0) 31Allowance for Impairment of Receivables (38) (212)Deferred Income Tax from Other Sectors 15 (123) Other 78 ... Other Economic Flows - included in Operating Result 501 (3,013)

Operating Result 1,517 (9,929)

Other Economic Flows - Other Comprehensive Income

Items that will not be Reclassified to Operating Result 3,503 (1,374)

Revaluations 2,811 4,263 Share of Associate's Other Comprehensive Income/(Loss) that will not be Reclassified Subsequently to Operating Result ... ... Actuarial Gain/(Loss) from Superannuation 1,953 (673) Net Gain/(Loss) on Financial Assets at Fair Value through Other Comprehensive Income (1,346) (4,979) Deferred Tax Direct to Equity 85 15

Items that may be Reclassified Subsequently to Operating Result (97) 920

Net Gain/(Loss) on Financial Instruments at Fair Value ... (8) Share of Associate's Other Comprehensive Income/(Loss) that may be Reclassified Subsequently to Operating Result ... (243) Other (97) 1,171Other Economic Flows - Other Comprehensive Income 3,406 (454)

Comprehensive Result - Total Change in Net Worth 4,923 (10,382)



Less: Net Other Economic Flows (3,907) 3,466 Equals: Budget Result - Net Operating Balance 1,016 (6,916)

Less: Net Acquisition of Non-Financials Assets

Purchases of Non-Financials Assets 19,855 18,070 Sales of Non-Financial Assets (1,031) (639) Less: Depreciation (6,110) (5,948) Plus: Change in Inventories (17) 839Plus: Other Movements in Non-Financials Assets

- Assets Acquired Using Leases 2,490 2,915- Other 336 (92)

Equals: Total Net Acquisition of Non-Financial Assets 15,523 15,145

Equals: Net Lending/(Borrowing) [Fiscal Balance] (14,507) (22,061)


Capital Expenditure(c) 22,345 20,985

(a) Certain items have been reclassified from taxation revenue to sales of goods and services, and other revenues, due to the implementationof AASB15: Revenue from Contracts with Customers that became effective after the 1920 Budget was compiled.

(b) Other Commonwealth Payments are shown as a separate line in these UPF tables, they are combined with the Other Grants andSubsidies in the Total State Sector Accounts.

(c) Capital expenditure comprises purchases of non-financial assets plus assets acquired using leases.



Table 3: NSW General Government Sector Statement of Financial Position at 30 June(a)

2020 2020Budget Actual

$m $m

Assets

Financial Assets

Cash and Cash Equivalent Assets 1,050 6,134Receivables(b) 7,069 11,281Investments, Loans and Placements

Financial Assets at Fair Value 34,618 40,874Other Financial Assets 1,827 1,533

Advances Paid 1,265 1,239Tax Equivalents Receivable 29 15Deferred Tax Equivalents 2,294 2,127Equity Investments

Investments in Other Public Sector Entities 108,612 100,249Investments in Associates 12,689 11,866Other 0 7

Total Financial Assets 169,454 175,326


Contract Assets(b) ... 24Inventories 298 1,188Forestry Stock and Other Biological Assets 9 14Assets Classified as Held for Sale 276 286Investment Properties ... ...Property, Plant and Equipment

Land and Buildings(c) 96,897 94,822Plant and Equipment(c) 11,692 12,538Infrastructure Systems(c) 129,273 124,406

Right of Use Assets(c) ... 6,503Intangibles 3,446 3,686Other 8,936 6,858Total Non-Financial Assets 250,826 250,325

Total Assets 420,280 425,651

Liabilities

Deposits Held 93 69Payables 7,273 7,031Contract Liabilities(d) ... 1,156Borrowings and Derivatives at Fair Value 147 392Borrowings at Amortised Cost 50,091 67,885Advances Received 783 696Employee Provisions 19,820 22,566Superannuation Provision(e) 58,731 67,890Tax Equivalents Payable 15 80Deferred Tax Equivalent Provision 122 82Other Provisions 10,556 14,101Other(d) 5,701 5,015

Total Liabilities 153,334 186,964

NET ASSETS 266,946 238,688



Table 3: NSW General Government Sector Statement of Financial Position at 30 June (cont)


$m $m

NET WORTH

Accumulated Funds 87,986 67,479Reserves 178,960 171,209

TOTAL NET WORTH 266,946 238,688

OTHER FISCAL AGGREGATESNet Debt(f) 12,354 19,261

Net Financial Liabilities(g) 92,493 111,887

Net Financial Worth(h) 16,119 (11,638)

(a) This table has been presented on a liquidity basis as per AASB 1049.(b) Reclassification of Receivables to Contract Assets due to the implementation of AASB15: Revenue from Contracts with Customers that

became effective after the 1920 Budget was compiled.(c) Reclassification of elements of Property, Plant and Equipment as Right of Use Assets due to the implementation of AASB16: Leases that

became effective after the 1920 Budget was compiled.(d) Reclassification of Other Liabilities to Contract Liabilities due to the implementation of AASB15: Revenue from Contracts with Customers

that became effective after the 1920 Budget was compiled.(e) The Superannuation Provision is reported net of the fair value of fund assets.(f) Net Debt equals the sum of deposits held, advances received and borrowings, minus the sum of cash and cash equivalents, advances paid

and investments, loans and placements.(g) Net financial liabilities equals net financial worth excluding equity investments in other public sector entities.(h) Net financial worth equals total financial assets minus total liabilities.



Table 4: NSW General Government Sector Statement of Cash Flows


$m $m

Cash Receipts from Operating Activities

Taxation(a) 31,954 28,346 Sale of Goods and Services(a) 10,249 8,878 Grant and Subsidies 32,859 33,775 Interest 235 291 Dividends and Income Tax Equivalents from Other Sectors 1,714 1,139 Other 10,283 12,559 Total Cash Receipts from Operating Activities 87,295 84,988

Cash Payments from Operating Activities

Employee Related (33,794) (34,083) Personnel Services(b) 0 (0) Superannuation (4,567) (4,649) Payments for Goods and Services(b) (20,661) (21,291) Grants and Subsidies (14,997) (16,180) Interest (1,868) (1,839) Other (4,714) (7,231) Total Cash Payments from Operating Activities (80,602) (85,272)

Net Cash Flows from Operating Activities 6,693 (284)

Cash Flows from Investments in Non-Financial Assets

Proceeds from Sale of Non-financial Assets 1,120 223 Purchases of Non-Financial Assets (20,525) (17,252) Net Cash Flows from Investments in Non-Financial Assets (19,404) (17,029)

Cash Flows from Investments in Financial Assets for Policy Purposes

Receipts 158 2,768 Payments (3,190) (4,739) Net Cash Flows from Investments in Financial Assets for Policy Purposes (3,032) (1,971)

Cash Flows from Investments in Financial Assets for Liquidity Purposes

Proceeds from Sale of Investments 9,145 6,131 Purchase of Investments (2,727) (4,313) Net Cash Flows from Investments in Financial Assets for Liquidity Purposes 6,417 1,818

Net Cash Flows from Investing Activities (16,019) (17,181)

Cash Flows from Financing Activities

Advances Received 170 21 Advances Repaid (203) (98)Proceeds from Borrowings 8,192 22,943 Repayment of Borrowings (1,323) (1,253) Deposits Received (Net) 2 2 Other (Net) 85 15 Net Cash Flows from Financing Activities 6,923 21,630

Net Increase/(Decrease) in Cash Held (2,403) 4,165

Opening Cash and Cash Equivalents 3,438 1,969 Reclassification of Cash Equivalents 15 (0) CLOSING CASH AND CASH EQUIVALENTS 1,050 6,134


(b) Payments for Personnel Services are shown as a separate line in these UPF tables, they are included as Payments for Goods andServices in the Total State Sector Accounts.



Table 5: NSW General Government Sector Taxes


$m $m

Taxes on Employers’ Payroll and Labour Force 10,008 8,671

Taxes on Property Land Taxes 4,538 4,477 Other 128 123

Total Taxes on Property 4,666 4,600

Taxes on the Provision of Goods and Services Excises and Levies ... ... Taxes on Gambling 2,631 2,207 Taxes on Insurance 2,822 3,118 Stamp Duties on Financial and Capital Transactions 7,223 7,278

Total Taxes on the Provision of Goods and Services 12,675 12,603

Taxes on Use of Goods and Performance of Activities Motor Vehicle Taxes (a) 3,588 3,117 Franchise Taxes (b) 5 ... Other (c) 899 950

Total Taxes on Use of Goods and Performance of Activities 4,492 4,067

Total Taxation Revenue 31,841 29,941

The following items have been reclassified from taxation revenue to other revenues due to the implementation of AASB15: Revenue from Contracts with Customers that became effective after the 1920 Budget was compiled: (a) Motor vehicle taxes recognised at Budget of $401m(b) Franchise taxes recognised at Budget of $5m(c) Other taxes recognised at Budget of $1m



Table 6: NSW General Government Sector Dividend and Income Tax Equivalent Income


$m $m

Dividend and Income Tax Revenue from the PNFC Sector 1,549 1,256 Dividend and Income Tax Revenue from the PFC Sector 329 98 Other Dividend Income 2,001 2,426

Total Dividend and Income Tax Equivalent Income 3,878 3,781



Table 7: NSW General Government Sector Grant Revenue and Expense


$m $m

Current Grants and Subsidies

Current Grants from the Commonwealth(a) General Purpose Grants 18,685 18,073 Specific Purpose Payments 10,431 11,278 National Partnership Payments 1,169 1,746 Other Commonwealth Payments 372 453

Total 30,657 31,551

Other Grants and Subsidies 573 601

Total Current Grants and Subsidies Revenue 31,230 32,152

Capital Grants and Subsidies

Capital Grants from the Commonwealth(a) General Purpose Payments ... ...Specific Purpose Payments ... ...National Partnership Payments 1,719 2,140

Total 1,719 2,140

Other Grants and Subsidies 54 12

Total Capital Grants and Subsidies Revenue 1,773 2,152

Total Grants and Subsidies Revenue 33,003 34,306

Current Grants, Subsidies and Transfer Payments Expense to:

State/Territory Government ... 36Local Government (a) 1,353 1,168Private and Not-for-Profit Sector (a) 7,933 9,108Other Sectors of Government 5,543 6,056

Total Current Grants, Subsidies and Transfer Payments Expense 14,829 16,369

Capital Grants, Subsidies and Transfer Payments to:

State/Territory Government ... ...Local Government (a) 215 402Private and Not-for-Profit Sector (a) 515 437Other Sectors of Government 43 162

Total Capital Grants, Subsidies and Transfer Payments Expense 773 1,001

Total Grants and Subsidies Expense 15,602 17,369

(a) Grant revenue and expenses above exclude the following transfer payments from the Commonwealth government that New SouthWales passes on to third parties. They are not recorded as New South Wales revenue and expense as the State has no control over theamounts that it passes on.

Transfer Receipts and Payments from the Commonwealth Government on-passed by New South Wales to Third Parties

Transfer Receipts

Current Transfer Receipts for Specific Purposes 4,308 5,500Capital Transfer Receipts for Specific Purposes ... ...

Total Receipts 4,308 5,500

Current Transfer Payments to:

Local Government 396 796Private and Not-For-Profit Sector 3,912 4,704

Capital Transfer Payments to:

Local Government ... ...Private and Not-For-Profit Sector ... ...

Total Payments 4,308 5,500



Table 8: NSW General Government Sector Expenses by Function(a)


$m $m

General Public Services

Executive and legislative organs, financial and fiscal affairs, external affairs 2,340 1,330 General Services 1,468 1,176 Public debt transactions 3,211 2,967 Transfers of a general character between different levels of government 122 72 General public services n.e.c. 413 5,003 Total General Public Services 7,554 10,551 Defence ... ...

Total Defence ... ...

Public Order and Safety

Police services 3,652 3,763 Civil and Fire protection services 1,129 1,233 Law courts 1,466 1,497 Prisons 1,973 2,044 Public order and safety n.e.c. 112 106

Total Public Order and Safety 8,332 8,643

Economic Affairs

General economic, commercial and labour affairs 709 3,277 Agriculture, forestry, fishing and hunting 987 1,358 Fuel and energy 123 64 Mining, manufacturing and construction 233 201 Communication 85 65 Other industries 471 236 Economic affairs n.e.c. 91 60

Total Economic Affairs 2,700 5,261

Environmental Protection

Waste management ... ... Waste water management ... ... Pollution abatement ... 111 Protection of biodiversity and landscape 1,046 11 Environmental protection n.e.c. 413 1,388

Total Environmental Protection 1,459 1,509

Housing and Community Amenities

Housing development 74 143 Community development 896 549 Water supply 89 303 Street lighting ... ... Housing and community amenities n.e.c. ... ... Total Housing and Community Amenities 1,060 995

Health

Medical products, appliances and equipment 607 603 Outpatient services 3,474 3,426 Hospital services 15,130 14,939 Mental health institutions 277 271 Community health services 2,650 2,555 Public health services 610 640 Research & Development Health 312 299 Health n.e.c. 581 581

Total Health 23,640 23,315



Table 8: NSW General Government Sector Expenses by Function(a) (cont)


$m $m

Recreation, Culture and Religion

Recreational and sporting services 949 565 Cultural services 519 504 Broadcasting and publishing services ... ... Religious and other community services ... ... Recreation, Culture and Religion n.e.c. 31 28

Total Recreation, culture and religion 1,499 1,097

Education

Pre-primary and primary education 6,679 6,673 Secondary education 6,097 5,713 Tertiary education 1,712 2,346 Education not definable by level 371 ... Subsidiary services to education 1,201 281 Education n.e.c. 2,106 2,011

Total Education 18,165 17,024

Social Protection

Sickness and disability 3,185 3,146 Old age 196 169 Survivors ... ... Family and children 2,123 2,296 Unemployment ... ... Housing 653 695 Social exclusion n.e.c. 539 590 Social protection n.e.c. 1,016 1,637 Total Social Protection 7,712 8,533

Transport

Road transport 4,022 3,828 Bus transport 527 ... Water transport 183 89 Railway transport 4,907 4,213 Air transport ... 16 Multi-mode urban transport 1,532 3,180 Pipeline and other transport ... ... Transport n.e.c. 8 30 Total Transport 11,180 11,356

Total Expenses 83,300 88,283

Notes: n.e.c. not elsewhere classified.(a) The original budget included a total of $120 million State Contingencies (in place of Advance to the Treasurer) which was allocated across

functions as the funds were spent in the actual year.



Table 9: NSW General Government Sector Capital Expenditure by Function (a)(b)


$m $m

General public services 1,125 2,126 Defence ... ... Public order and safety 1,254 1,615 Economic affairs 405 133 Environmental protection 28 17 Housing and community amenities 485 242 Health 2,728 2,525 Recreation, culture and religion 375 238 Education 2,366 2,189 Social protection 143 87 Transport 13,435 11,814

Total Purchases of Non-Financial Assets 22,345 20,985

(a) This table comprises purchases of non-financial assets, including assets acquired under leases, and reconciles to the general governmentsector capital expenditure program.

(b) The original budget included a total of $120 million State Contingencies (in place of Advance to the Treasurer) which was allocated acrossfunctions as the funds were spent in the actual year.



Table 10: NSW Public Non-Financial Corporation Sector Statement of Comprehensive Income


$m $m


Grants and Subsidies - Other Commonwealth Payments(a) 3 3 - Other Grants and Subsidies(a) 2,574 3,153

Sale of Goods and Services 8,135 7,836 Interest 54 51 Other Dividends and Distributions ... 6 Fines, Regulatory Fees and Other 799 620 Total Revenue from Transactions 11,566 11,669


Employee 2,469 2,361 Personnel Services Expense 652 498 Superannuation

- Superannuation Interest Cost 44 45 - Other Superannuation 224 215

Depreciation and Amortisation 3,457 3,206 Interest 1,111 1,040 Income Tax Equivalents 263 210 Other Operating Expense 5,467 5,580 Grants, Subsidies and Other Transfers 93 60 Total Expenses from Transactions 13,780 13,215

NET OPERATING BALANCE - SURPLUS/(DEFICIT) AFTER TAX (2,214) (1,546)



Table 10: NSW Public Non-Financial Corporation Sector Statement of Comprehensive Income (cont)


$m $m


Gain/(Loss) from Liabilities ... (7) Other Net Gains/(Losses) 198 (655) Allowance for Impairment of Receivables (2) (6)Deferred Income Tax (15) 120Other ... ... Other Economic Flows - included in Operating Result 181 (547)

Operating Result (2,033) (2,094)


Items that will not be Reclassified to Operating Result 2,709 245

Revaluations 2,630 278 Actuarial Gain/(Loss) from Superannuation 164 (17) Deferred Tax Direct to Equity (85) (15)

Items that may be Reclassified Subsequently to Operating Result (0) (103)

Net Gain/(Loss) on Financial Instruments at Fair Value ... (6)Other (0) (96)Other Economic Flows - Other Comprehensive Income 2,709 142

Comprehensive Result - Before Transactions with Owners in their capacity as Owners 675 (1,951)

Dividends Distributed (1,285) (1,077) Net Equity Injections/(Transfers) 9,116 6,654 Comprehensive Result - Total Change in Net Worth 8,506 3,626


Comprehensive Result - Before Transactions with Owners in their capacity as Owners 675 (1,951)

Less: Net Other Economic Flows (2,890) 405 Equals: Net Operating Balance (2,214) (1,546)


Purchases of Non-Financials Assets 5,338 4,205 Sales of Non-Financial Assets (702) (264)Less: Depreciation (3,457) (3,206)Plus: Change in Inventories 239 108 Plus: Other Movements in Non-Financials Assets

- Assets Acquired Using Leases 56 75 - Other 356 357




Capital Expenditure(b) 5,394 4,280

Dividends Accrued 661 1,077

(a) Other Commonwealth Payments are shown as a separate line in these UPF tables, they are combined with the Other Grants and Subsidiesin the Total State Sector Accounts

(b) Capital expenditure comprises purchases of non-financial assets plus assets acquired using leases.



Table 11: NSW Public Non-Financial Corporation Sector Statement of Financial Position at 30 June


$m $m

Assets

Financial Assets

Cash and Cash Equivalent Assets 1,519 2,110 Receivables(a) 1,250 1,295 Investments, Loans and Placements

Financial Assets at Fair Value 237 243 Other Financial Assets 429 421

Advances Paid 1 0 Tax Equivalents Receivable 15 77 Deferred Tax Equivalents 122 84 Equity Investments

Other 167 181 Total Financial Assets 3,739 4,411


Contract Assets(a) ... ...Inventories 659 576 Forestry Stock and Other Biological Assets 985 827 Assets Classified as Held for Sale 49 49 Investment Properties 603 676 Property, Plant and Equipment

Land and Buildings(b) 76,744 73,668 Plant and Equipment(b) 6,578 4,106 Infrastructure Systems(b) 57,971 55,792

Right of Use Assets(b) ... 2,969Intangibles 1,192 1,070 Other 222 629 Total Non-Financial Assets 145,003 140,363

Total Assets 148,742 144,774

Liabilities

Deposits Held 54 21 Payables 2,076 2,005 Contract Liabilities(c) ... 108Borrowings and Derivatives at Fair Value 2 7 Borrowings at Amortised Cost 27,015 26,707 Advances Received 463 463 Employee Provisions 1,056 1,227 Superannuation Provision(d) 2,632 3,057 Tax Equivalents Payable 20 0 Deferred Tax Equivalent Provision 2,294 2,129 Other Provisions 1,194 1,664 Other(c) 310 192 Total Liabilities 37,117 37,580

NET ASSETS 111,625 107,193



Table 11: NSW Public Non-Financial Corporation Sector Statement of Financial Position at 30 June (cont)


$m $m

NET WORTH

Accumulated Funds 34,642 47,004 Reserves 76,983 60,190



Net Debt(e) 25,349 24,424

Net Financial Liabilities(f) 33,378 33,170

Net Financial Worth(g) (33,378) (33,170)

(a) Reclassification of Receivables to Contract Assets due to the implementation of AASB15: Revenue from Contracts with Customers thatbecame effective after the 1920 Budget was compiled.

(b) Reclassification of elements of Property, Plant and Equipment as Right of Use Assets due to the implementation of AASB16: Leases thatbecame effective after the 1920 Budget was compiled.

(c) Reclassification of Other Liabilities to Contract Liabilities due to the implementation of AASB15: Revenue from Contracts with Customersthat became effective after the 1920 Budget was compiled.

(d) The Superannuation Provision is reported net of the fair value of fund assets.(e) Net Debt equals the sum of deposits held, advances received and borrowings, minus the sum of cash and cash equivalents, advances paid

and investments, loans and placements.(f) Net financial liabilities equals net financial worth excluding equity investments in other public sector entities.(g) Net financial worth equals total financial assets minus total liabilities



Table 12: NSW Public Non-Financial Corporation Statement of Cash Flows


$m $m


Sale of Goods and Services 8,207 7,728 Grant and Subsidies 2,574 3,151 Interest 30 51 Other 1,065 1,119 Total Cash Receipts from Operating Activities 11,877 12,049


Employee Related (2,599) (2,420)Personnel Services(a) (652) (644)Superannuation (250) (229)Payments for Goods and Services(a) (5,597) (5,380)Grants and Subsidies (90) (60)Interest (982) (946)Distributions Paid (215) (301)Other (647) (1,067)Total Cash Payments from Operating Activities (11,031) (11,046)

Net Cash Flows from Operating Activities 846 1,003


Proceeds from Sale of Non-financial Assets 702 264 Purchases of Non-Financial Assets (5,275) (4,258)

Net Cash Flows from Investments in Non-Financial Assets (4,573) (3,994)


Receipts ... (26)Payments (0) ...Net Cash Flows from Investments in Financial Assets for Policy Purposes (0) (26)


Proceeds from Sale of Investments 195 192 Purchase of Investments (24) (5)Net Cash Flows from Investments in Financial Assets for Liquidity Purposes 171 186



Advances Received 2,666 1,964 Advances Repaid (31) (31)Proceeds from Borrowings 1,849 1,841 Repayment of Borrowings (320) (643)Dividends Paid (1,351) (727)Deposits Received (Net) (15) (49)Other (Net) (88) 9Net Cash Flows from Financing Activities 2,710 2,364

Net Increase/(Decrease) in Cash Held (846) (468)

Opening Cash and Cash Equivalents 2,365 2,548 Reclassification of Cash Equivalents ... 29

CLOSING CASH AND CASH EQUIVALENTS 1,519 2,110

Derivation of Cash Result

Net Cash Flows from Operating Activities 846 1,003 Net Cash Flows from Investments in Non-Financial Assets (4,573) (3,994)Dividend Distributions (1,351) (727)

Cash Surplus/(Deficit) (5,078) (3,718)

(a) Payments for Personnel Services are shown as a separate line in these UPF tables, they are included as Payments for Goods and Servicesin the Total State Sector Accounts.



Table 13: NSW Non-Financial Public Sector Statement of Comprehensive Income


$m $m


Taxation (a) 31,333 29,419 Grants and Subsidies

- Commonwealth General Purpose 18,685 18,073 - Commonwealth Specific Purpose Payments 10,431 11,278 - Commonwealth National Partnership Payments 2,888 3,886 - Other Commonwealth Payments(b) 375 458 - Other Grants and Subsidies(b) 528 531

Sale of Goods and Services(a) 13,778 13,525 Interest 309 361 Dividend and Income Tax Equivalents from Other Sectors 328 98 Other Dividends and Distributions 2,001 2,432 Fines, Regulatory Fees and Other(a) 6,235 4,729 Total Revenue from Transactions 86,891 84,791


Employee 36,724 37,905 Superannuation

- Superannuation Interest Cost 1,123 927 - Other Superannuation 3,373 3,502

Depreciation and Amortisation 9,567 9,139 Interest 3,311 3,069 Other Operating Expense 22,335 25,654 Grants, Subsidies and Other Transfers 12,972 14,124 Total Expenses from Transactions 89,406 94,320

NET OPERATING BALANCE - SURPLUS/(DEFICIT) (2,514) (9,529)



Table 13: NSW Non-Financial Public Sector Statement of Comprehensive Income (cont)


$m $m


Gain/(Loss) from Liabilities 11 (208)Other Net Gains/(Losses) 633 (3,189)Share of Earnings/(Losses) from Equity Investments (excl. Dividends) ... 46 Allowance for Impairment of Receivables (40) (218)Other 78 ... Other Economic Flows - included in Operating Result 682 (3,569)

Operating Result (1,832) (13,098)


Items that will not be Reclassified to Operating Result 6,853 2,254

Revaluations 5,471 4,541 Share of Associate's Other Comprehensive Income/(Loss) that will not be Reclassified Subsequently to Operating Result ... ... Actuarial Gain/(Loss) from Superannuation 2,117 (690) Net Gain/(Loss) on Financial Assets at Fair Value through Other Comprehensive Income (735) (1,596)Deferred Tax Direct to Equity 0 ...

Items that may be Reclassified Subsequently to Operating Result (97) 462

Net Gain/(Loss) on Financial Instruments at Fair Value ... (14) Share of Associate's Other Comprehensive Income/(Loss) that may be Reclassified Subsequently to Operating Result ... (243) Other (97) 720Other Economic Flows - Other Comprehensive Income 6,755 2,716



Comprehensive Result - Before Transactions with Owners in their capacity as Owners 4,923 (10,382)

Less: Net Other Economic Flows (7,438) 853 Equals: Net Operating Balance (2,514) (9,529)


Purchases of Non-Financials Assets 25,193 22,275 Sales of Non-Financial Assets (1,733) (903)Less: Depreciation (9,567) (9,139)Plus: Change in Inventories 222 927 Plus: Other Movements in Non-Financials Assets

- Assets Acquired Using Leases 2,546 2,988 - Other 655 259




Capital Expenditure(c) 27,739 25,264

Dividends Accrued ... ...


(b) Other Commonwealth Payments are shown as a separate line in these UPF tables, they are combined with the Other Grants andSubsidies in the Total State Sector Accounts.

(c) Capital expenditure comprises purchases of non-financial assets plus assets acquired using leases.



Table 14: NSW Non-Financial Public Sector Statement of Financial Position at 30 June


$m $m

Assets

Financial Assets

Cash and Cash Equivalent Assets 2,569 8,244 Receivables(a) 6,766 10,578 Investments, Loans and Placements

Financial Assets at Fair Value 34,855 41,117 Other Financial Assets 2,258 1,879

Advances Paid 802 776 Tax Equivalents Receivable 8 12 Deferred Tax Equivalents 0 0 Equity Investments

Investments in Other Public Sector Entities (3,141) (6,747)Investments in Associates 12,689 11,866 Other 167 187

Total Financial Assets 56,974 67,912


Contract Assets(a) (0) 24Inventories 957 1,743 Forestry Stock and Other Biological Assets 994 841 Assets Classified as Held for Sale 325 335 Investment Properties 603 676 Property, Plant and Equipment

Land and Buildings(b) 174,234 168,490 Plant and Equipment(b) 18,270 16,644 Infrastructure Systems(b) 187,243 180,197

Right of Use Assets(b) ... 9,282Intangibles 4,638 4,757 Other 8,668 7,468 Total Non-Financial Assets 395,931 390,458

Total Assets 452,905 458,370

Liabilities

Deposits Held 147 90 Payables 8,721 8,374 Contract Liabilities(c) ... 1,259Borrowings and Derivatives at Fair Value 150 399 Borrowings at Amortised Cost 77,102 94,509 Advances Received 783 696 Employee Provisions 20,857 23,774 Superannuation Provision(d) 61,363 70,947 Other Provisions 10,829 14,430 Other(c) 6,006 5,205 Total Liabilities 185,960 219,682

NET ASSETS 266,946 238,688



Table 14: NSW Non-Financial Public Sector Statement of Financial Position at 30 June (cont)


$m $m

NET WORTH

Accumulated Funds 116,716 110,728 Reserves 150,230 127,959



Net Debt(e) 37,699 43,677

Net Financial Liabilities(f) 125,845 145,023

Net Financial Worth(g) (128,986) (151,770)

(a) Reclassification of Receivables to Contract Assets due to the implementation of AASB15: Revenue from Contracts with Customers thatbecame effective after the 1920 Budget was compiled.

(b) Reclassification of elements of Property, Plant and Equipment as Right of Use Assets due to the implementation of AASB16: Leases thatbecame effective after the 1920 Budget was compiled.

(c) Reclassification of Other Liabilities to Contract Liabilities due to the implementation of AASB15: Revenue from Contracts with Customersthat became effective after the 1920 Budget was compiled.

(d) The Superannuation Provision is reported net of the fair value of fund assets.(e) Net Debt equals the sum of deposits held, advances received and borrowings, minus the sum of cash and cash equivalents, advances paid

and investments, loans and placements.(f) Net financial liabilities equals net financial worth excluding equity investments in other public sector entities.(g) Net financial worth equals total financial assets minus total liabilities.



Table 15: NSW Non-Financial Public Sector Statement of Cash Flows


$m $m


Taxation(a) 31,470 27,854 Sales of Goods and Services(a) 14,359 13,538 Grant and Subsidies 32,760 33,710 Interest 204 303 Dividends and Income Tax Equivalents 148 135 Other 11,327 13,519 Total Cash Receipts from Operating Activities 90,268 89,059


Employee Related (36,255) (36,346)Payments for Personnel Services(b) 0 0 Superannuation (4,817) (4,878)Payments for Goods and Services(b) (22,474) (23,844)Grants and Subsidies (12,367) (12,975)Interest (2,788) (2,746)Other (5,383) (8,213)Total Cash Payments from Operating Activities (84,083) (89,003)

Net Cash Flows from Operating Activities 6,185 56


Proceeds from Sale of Non-financial Assets 1,823 487 Purchases of Non-Financial Assets (25,801) (21,547)

Net Cash Flows from Investments in Non-Financial Assets (23,978) (21,060)


Receipts 127 2,711 Payments (524) (2,775)

Net Cash Flows from Investments in Financial Assets for Policy Purposes (397) (63)


Proceeds from Sale of Investments 9,333 6,309 Purchase of Investments (2,745) (4,314)Net Cash Flows from Investments in Financial Assets for Liquidity Purposes 6,587 1,996



Advances Received 170 21 Advances Repaid (203) (98)Proceeds from Borrowings 10,042 24,784Repayment of Borrowings (1,642) (1,886)Dividends Paid 0 ... Deposits Received (Net) (14) (47)Other (Net) 0 (4)Net Cash Flows from Financing Activities 8,353 22,769

Net Increase/(Decrease) in Cash Held (3,250) 3,698

Opening Cash and Cash Equivalents 5,804 4,517 Reclassification of Cash Equivalents and Other Adjustments 15 29 CLOSING CASH AND CASH EQUIVALENTS 2,569 8,244


Net Cash Flows from Operating Activities 6,185 56 Net Cash Flows from Investments in Non-Financial Assets (23,978) (21,060)Dividends Paid ... ...

Cash Surplus/(Deficit) (17,793) (21,004)


(b) Payments for Personnel Services are shown as a separate line in these UPF tables, they are included as Payments for Goods andServices in the Total State Sector Accounts.



Table 16: NSW Public Financial Corporations Statement of Comprehensive Income(a)

2019-20Actual

$m


Sale of Goods and Services(b) 1,402 Interest 2,388 Other Dividends and Distributions 2,478 Fines, Regulatory Fees and Other 1 Total Revenue from Transactions 6,269


Employee 207 Superannuation

- Superannuation Interest Cost 0 - Other Superannuation 16

Depreciation and Amortisation 20 Interest 2,222 Income Tax Equivalents 22 Other Operating Expenses 3,832 Grants, Subsidies and Other Transfers 22 Total Expenses from Transactions 6,341

NET OPERATING BALANCE - SURPLUS/(DEFICIT) AFTER TAX (71)



Table 16: NSW Public Financial Corporations Statement of Comprehensive Income (cont)

2019-20Actual

$m


Gain/(Loss) from Liabilities (418) Other Net Gains/(Losses) (1,446) Other Economic Flows - included in Operating Result (1,866)

Operating Result (1,937)


Items that will not be Reclassified to Operating Result (1)

Revaluations (1) Actuarial Gain/(Loss) from Superannuation 0 Net Gain/(Loss) on Financial Assets at Fair Value through Other Comprehensive Income ... Deferred Tax Direct to Equity ...

Items that may be Reclassified Subsequently to Operating Result (0)

Net Gain/(Loss) on Financial Instruments at Fair Value ... Other (0) Other Economic Flows - Other Comprehensive Income (1)

Comprehensive Result - Before Transactions with Owners in their capacity as Owners (1,938)

Dividends Distributed (76) Net Equity Injections/(Transfers) ... Comprehensive Result - Total Change in Net Worth (2,013)


Comprehensive Result - Before Transactions with Owners in their capacity as Owners (1,938)

Less: Net Other Economic Flows 1,867 Equals: Net Operating Balance (71)


Purchases of Non-Financials Assets 8 Sales of Non-Financial Assets (0)Less: Depreciation (20)Plus: Change in Inventories ... Plus: Other Movements in Non-Financials Assets

- Assets Acquired Using Leases ... - Other ...

Equals: Total Net Acquisition of Non-Financial Assets (12)

Equals: Net Lending/(Borrowing) [Fiscal Balance] (59)


Capital Expenditure(c) 8

Dividends Accrued 76

(a) The current Uniform Presentation Framework does not require the publishing of the results of the Public Financial Corporation Sector atbudget time and mid-year, therefore a Budget column is not available.

(b) Includes Taxation revenue which is shown as a separate line item in the TSSA.(c) Capital expenditure comprises purchases of non-financial assets plus assets acquired using leases.



Table 17: NSW Public Financial Corporations Sector Statement of Financial Position at 30 June(a)

2020Actual

$m

Assets

Financial Assets

Cash and Cash Equivalent Assets 2,797 Receivables 1,211 Investments, Loans and Placements

Financial Assets at Fair Value 84,290 Other Financial Assets 11

Equity Investments Other 21,554

Total Financial Assets 109,862


Property, Plant and Equipment Land and Buildings 12 Plant and Equipment 13

Right of Use Assets 63Intangibles 11 Other 83 Total Non-Financial Assets 182

Total Assets 110,044

Liabilities

Deposits Held 409 Payables 346 Borrowings and Derivatives at Fair Value 98,364 Borrowings at Amortised Cost 80 Employee Provisions 43 Superannuation Provision(b) 5 Tax Equivalents Payable 12 Other Provisions 7,432 Other 10,102 Total Liabilities 116,791

NET ASSETS (6,747)

NET WORTH

Accumulated Funds (6,747)Reserves ...

TOTAL NET WORTH (6,747)


Net Debt(c) 11,755

Net Financial Liabilities(d) 6,929

Net Financial Worth(e) (6,929)

(a) The current Uniform Presentation Framework does not require the publishing of the results of the Public Financial Corporation Sector atbudget time and mid-year, therefore a Budget column is not available.

(b) The Superannuation Provision is reported net of the fair value of fund assets.(c) Net debt equals the sum of deposits held, advances received and borrowings, minus the sum of cash and cash equivalents, advances paid

and investments, loans and placements.(d) Net financial liabilities equals total liabilities minus financial assets.(e) Net financial worth equals total financial assets minus total liabilities.



Table 18: NSW Public Financial Corporations Sector Statement of Cash Flows(a)

2019-20Actual

$m


Sales of Goods and Services(b) 1,393 Interest 2,368 Other 2,668 Total Cash Receipts from Operating Activities 6,429


Employee Related (199)Superannuation (16)Payments for Goods and Services (3,445)Grants and Subsidies (13)Interest (2,046)Distributions Paid (18)Other (1,012)Total Cash Payments from Operating Activities (6,748)

Net Cash Flows from Operating Activities (320)


Proceeds from Sale of Non-financial Assets 0 Purchases of Non-Financial Assets (8)Net Cash Flows from Investments in Non-Financial Assets (8)


Receipts ... Payments ...

Net Cash Flows from Investments in Financial Assets for Policy Purposes ...


Proceeds from Sale of Investments 4,613 Payments for Purchase of Investments (28,657)

Net Cash Flows from Investments in Financial Assets for Liquidity Purposes (24,045)

Net Cash Flows from Investing Activities (24,053)


Proceeds from Borrowings 103,028 Repayment of Borrowings (80,442)Dividends Paid (118)Deposits Received (Net) ... Other (Net) ... Net Cash Flows from Financing Activities 22,468

Net Increase/(Decrease) in Cash Held (1,904)

Opening Cash and Cash Equivalents 4,701 Reclassification of Cash Equivalents and Other Adjustments ... CLOSING CASH AND CASH EQUIVALENTS 2,797


Net Cash Flows from Operating Activities (320)Net Cash Flows from Investments in Non-Financial Assets (8)Dividends Paid (118)

Cash Surplus/(Deficit) (445)

(a) The current Uniform Presentation Framework does not require the publishing of the Public Financial Corporation Sector at budget time andmid-year, therefore the Budget column is not presented.

(b) Includes Taxation revenue which is shown as a separate line item in the TSSA.

Report on State Finances 2019-2020 · 2020. 11. 18. · Report on State Finances 2019-20 2 - 1 2....

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